Time to Review Your Estate Plan

From the MO Business and Estate Planning Blog by Steve Bahr and Austin Dowling

The legislation passed in the early hours of 2013 known as the American Taxpayer Relief Act of 2012 (the Act), made substantial changes to a number of estate planning considerations and offered increased certainty in numerous estate planning areas. For the first time in over a decade, these changes have no explicit expiration date. This allows greater certainty for clients and attorneys alike in achieving a clients’ estate planning goals. Some highlights of the Act include:

• Permanently maintains the Estate Tax Exclusion. This amount is adjusted each year for inflation. For 2014, the exclusion is $5.34 million.
• Unifies the Estate Tax Exclusion and the Gift Tax Exclusion, meaning an individual may make lifetime gifts up to $5.34 million without paying gift tax (although any gifts that use a portion of this exclusion count towards, and reduces the Estate Tax Exclusion available at death).
• Makes permanent the concept of portability, which, generally, allows a surviving spouse to carryover any unused exclusion of his or her deceased spouse, effectively granting a $10.68 million exclusion to married couples in 2014.
• Sets the estate tax rate at 40%, applied to any amount over the exclusion.

In addition to basic estate planning considerations, the Act makes it important for all clients to keep good documentation of any and all lifetime gifts they make. A surviving spouse who plans to take advantage of the estate tax portability tool must be diligent about filing the requisite estate tax returns within nine months after their spouses’ death. For any surviving spouse or divorcee who has remarried, a careful review of his or her estate plan becomes especially important since there are a variety of beneficiary and tax consequences to consider.

The Act will not affect everyone. For some, an update may not be necessary after a review. For others, a review may warrant modifications, including changes to beneficiaries, guardians and powers of attorneys. Additionally, consolidation of trusts may be recommended because of the new favorable estate tax laws.

We encourage clients to review their estate plan every three to five years. Now is a good time to do so, given the relative certainty and permanency that the new Act provides. In addition to the changes in law mentioned above, changes in clients’ personal situations may also necessitate a review or change to their estate plan. Births, deaths, marriages and divorces can all have an impact and cause plans to be outdated, as can changes in personal finances and business.

If it has been more than three years since you have reviewed your estate plan with an attorney, the Estate Planning attorneys at Dysart Taylor would be happy to review your current plan. We can discuss your situation and goals, regardless as to if we originally created your current estate plan. Please call us at 816.931.2700 to schedule an appointment.

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