As you may know, the Internal Revenue Code has recently been revised, and in the case of the Estate Tax, the changes are substantial.
The amount of the individual exclusion which was scheduled to be $1,000,000 in 2011 was increased to $5,000,000. Effectively, with the marital deduction, a married couple may die with assets totaling $10,000,000 and not pay any federal estate tax. Additionally, the maximum tax rate has been reduced to 35%.
Many whose estates would have been subject to the tax previously may have adopted estate plans which are fairly complex. With the recent changes, it may be time to reconsider your plan; in many cases it will mean a substantial simplification of the plan and a much less costly estate administration.
Paradoxically, Congress’ largess may cause unintended (and perhaps unwanted) results. Certain marital deduction formulas which have been used in wills for larger estates might now result in the creation of trusts which serve no purpose or, worse, have an effect which countervails the intention of the decedent.
We tend to sign our wills and then ignore them as they collect dust in a safe deposit box. Even without the change in the tax law it’s a good thing to review your wills, “durable” powers of attorney, and “living wills” (advance health directives).
Circumstances change. As your children grow into adulthood, their needs vary; where you might have desired a trust for a child, now you may wish to make an outright gift. Perhaps Uncle Charlie, whom you have named as executor, has died prematurely and a successor is needed. A minor change in your will might save your heirs money and angst. Most important, your estate will devolve as you wish and for the purposes intended.
It is worth the effort, and if you wish to discuss the changes in the Internal Revenue Code or any other aspects of your estate plan, please call us.
– Ken Butera