The Tax Cuts and Jobs Act signed into law at the end of 2017 sets the estate tax exemption at $11.2 million per individual for 2018. (The exemption amount is adjusted annually for inflation.)
Now that the estate tax exemption has seriously increased, it’s time to review your estate plan to make sure it still accomplishes your wishes.
With the higher exemption amount, fewer estates will be subject to tax. Regardless of the size of one’s estate, everyone needs the following basic documents, and they need to be updated for the current rules and your particular circumstances:
• A financial inventory listing such things as bank accounts, income sources, insurance policies and other assets.
• A will that specifies who is to inherit your assets and who is to be the guardian of any minor children you have.
• A power of attorney naming someone to handle your financial affairs if you become disabled or seriously ill.
• A health care directive (living will) stating your wishes should you become terminally ill or permanently unconscious.
Your estate plan review should include checking your exposure to state inheritance taxes and an update, if needed, to beneficiary designations on such things as individual retirement accounts (IRAs) and insurance policies.
Talk to your attorney about your estate plan, and give us a call to discuss how your situation affects your 2018 tax planning.