Besides Saving Estate Taxes, What Should Be on Your Estate Planning Checklist?

July 11, 2022 | Patricia C. Marcin | Trusts & Estates

The federal estate tax exemption provisions are set to expire at the end of 2025, potentially requiring more people to pay estate taxes. In view of the uncertainty of the estate tax laws, it is important to have estate planning documents that are flexible enough to adjust to changing estate tax laws.

Generally, the exemption amount is the value of the assets that you can give to your heirs before any estate or gift tax is due. The federal estate tax exemption is now $12.06 million per person ($24.12 million/couple); the New York State estate tax exemption is now $6.11 million per person. Note that  while current New York law does not impose a gift tax, it does include taxable gifts you make within three years of death in your NY taxable estate.

Some may believe that if the value of their assets is under the exemption amounts, there is no need to engage in estate planning. The current federal provisions, however, will revert back to $5 million (indexed for inflation) at the end of 2025. What New York will do on the estate tax exemption front is a guessing game; not long ago, that exemption amount was only $1 million.

In addition to considering estate taxes, there are numerous non-tax considerations that should be addressed in estate planning documents, including:
1. Making sure your spouse is provided for adequately;
2. Making sure your intended beneficiaries get what you want them to get;
3. Addressing issues of second marriages and children from a prior marriage;
4. Avoiding probate if there could be probate issues under the particular circumstances;
5. Providing trusts for adult children and grandchildren to protect them from their creditor’s claims (ex., divorce) or from themselves or others who may try to influence them;
6. Providing trusts for a minor’s property to avoid the costs and hassle of appointing a guardian of the property for them;
7. Providing trusts for special needs beneficiaries to avoid disqualification for government benefits;
8. Naming executors and trustees to make decisions about your assets after your death.
9. Updating your Power of Attorney and Health Care Proxy to make sure you have appointed the agent(s) you want;
10. Checking the title and beneficiary designations on all of your accounts (ex., joint, or transfer on death), including your retirement accounts and life insurance policies.

As noted, it is important to address your estate planning for tax and non-tax purposes.

This article first appeared in the July 2022 issue of Lloyd Harbor Life.

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