Got a dusty old binder with your will and estate plan? Even if you had your paperwork set up a few years ago, all of your documents are now out of date, thanks to new tax laws that went into effect at the turn of the year.
"Blow the dust off and see if it’s even needed anymore," said certified financial planner Leon LaBrecque, who is also a tax attorney, a certified public accountant and a chartered financial analyst in Troy, Michigan.
Strategies that financial planners and trust attorneys have been using for years to help families avoid paying estate taxes may now fall by the wayside, because the exemption for the size of estates has doubled to $22 million for couples, from $11 million. It was just $600,000 in 1997.
"Not a lot of planners have clients worth more than $22 million, said LaBrecque.
Those who have ultra-high-net-worth clients can still employ the same playbook of trusts to avoid taxes, but those with estates worth less than $22 million will not need to bother with things like credit-bypass trusts, qualified terminable interest property trusts and many life insurance trusts.
But that does not mean trusts will fade away and that all estate planning can just cease. The most important parts of the process have to do with your financial health while you are still alive: You need power of attorney forms and healthcare proxies in case you are incapacitated.
You also need to make sure your beneficiaries are updated on all your accounts, especially life insurance policies and 401(k)s from old jobs.
"It’s still staggering how many people with real means have no documents. Now that they don’t need to pay tax, we worry they won’t do the things they need to do," said Jill Schlesinger, a personal finance expert who serves as the Senior CFP Board Ambassador.
Reasons To Plan
Estate planning at its core is about keeping control over your assets even after you die.