Why Estate Planning Awareness Week?
In 2008, Congress designated the third week of October (October 17-23, 2022) as National Estate Planning Awareness Week as a reminder to the public of the importance of estate planning.
Having a proper estate plan is important to ensure that you and your loved ones are taken care of. When done well, estate planning aims both to allow you to pass on your assets as you see fit, and to minimize the state and federal taxes that accompany the transfer of significant wealth. Additionally, estate planning can potentially enable you to decide which people and charitable organizations will receive your wealth at your death. Failing to plan often leaves the government make those decisions for you.
Does Your Estate Plan Accomplish Your Goals?
Have you had a chance to review your plan lately? Changes in the law, family, business and other life circumstances can have sweeping effects in your planning. Estate planning is not a one-size-fits-all endeavor and it needs to be reviewed and customized over time to best protect each client and their loved ones.
Estate Planning Awareness Week provides us with an annual reminder to look at some of the following issues affecting clients:
Have your family circumstances changed? Are your children no longer minors? Has there been a divorce?
Do you need to transition your business to the next generation? Are you planning on selling your business soon?
Have you purchased any asset that needs to be transferred to your trust? Has your estate value increased and is your estate now taxable? You are subject to Federal estate tax on the value of your total assets, including your life insurance (based on the death benefit) and retirement assets, in excess of the federal estate tax exemption (currently $12.06M in 2022). You are subject to Illinois estate tax if you are an Illinois resident, or you are not an Illinois resident but have Illinois real estate or tangible property located in Illinois and you have more than $4M in total assets including your life insurance (based on the death benefit) and retirement assets. Do you have a highly appreciated asset with a low-cost basis that you would like to sell?
Are your Executors, Trustees and Agents under your Powers of Attorney still the same individuals you would choose to assist you in incapacity or administer your estate after you die? Have you had a falling out with any friends or family currently named?
Charitable Giving Check
Is there a new cause that you wish to support? Did you know that you can obtain income tax deductions now for a gift to a charitable trust?
In the past 5 years, there have been major changes in federal estate and gift tax law and federal law affecting retirement assets. Is your estate taxable? Time is running out to take advantage of the increase in gift tax exemption provided by the Tax Cut and Jobs Act. This increase in exemption is set to “sunset” after 2025 back to the prior lower amounts. If you gift now, you may be able to gift more without paying estate and gift tax liability.
A member of HMB’s Private Client, Trusts & Estates Group can help you determine if your estate plan accomplishes your goals. Please reach out to one of our Partners to discuss whether your estate plan needs an update, or to discover new planning initiatives.