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Estate Planning is a Lifetime Process

Estate Planning is a Lifetime Process

Estate planning is a lifetime process, not simply an after-tax distribution program.  You should periodically review your estate planning goals and estate documents in place to minimize the impact that the bumps in life can cause to your estate planning.

The following is a quick checklist of some life changing events or activities that could affect your estate planning needs:

  1. More than two years since you reviewed your estate plan
  2. Death or incapacity of a spouse
  3. Death or incapacity of an executor, trustee or guardian
  4. Marriage, remarriage or divorce
  5. Marriage, remarriage or divorce of a beneficiary
  6. Birth or adoption of a child or grandchild
  7. Acquisition of substantial life insurance
  8. Move to another state or acquisition of property in another state
  9. Serious illness of a family member
  10. Change in business interest or retirement
  11. Financial irresponsibility of a child
  12. Changes in federal and state estate tax law

While only impacting half of 1% of the U.S. population, the incoming President Trump and the Republican Congress propose the repeal of “death tax”.   However, each proposal is different where President Trump proposes the elimination of step-up in basis for estates exceeding $5 million ($10 million for married spouses) and provides an exemption for family farms and businesses, the Republican Congress is silent in its proposal if step-up in basis or carryover basis would apply at an individual’s passing.   In addition, there is uncertainty if a capital gains tax would apply at an individual’s passing or when the beneficiary ultimately sells the inherited property.   While both proposals have the elimination of the estate and generation skipping tax, neither President Trump nor the Republican Congress propose the elimination of the federal gift tax.

Along with the changes in federal estate tax, many states have enacted legislation that has changed the state’s respective estate tax.   Recently New Jersey increased its estate exemption to $2 million with a proposed repeal in 2018.    New York had previously passed legislation to increase the state estate exemption to equal the federal estate exemption by 2019.   Connecticut’s estate tax exemption is $2 million and is one of the few states that still have a gift tax.   With the change of the state estate taxes paid from a credit on the federal estate tax return to a deduction on the federal estate tax return in the 2001 tax law, Florida no longer has a state estate tax.

Legislative action on the estate tax in 2017 seems likely, in view of President Trump and the Republican Congress proposals.  However, given the current economic environment and the need for the federal government to raise revenue, complete and permanent repeal of the estate tax is unlikely.   If any of the life changing events listed above applies to your individual situation and the changes in federal and state estate tax law, it might be time for you to review your estate planning documents to ensure these documents still meet your estate planning goals and objectives.

Hal R. Terr, CPA, PFS, CFP®, AEP®, Partner Hal R. Terr, CPA, PFS, CFP®, AEP®, Partner
T (609) 520 1188
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To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

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