As we find ourselves well into the latter half of the year, the thoughts of winter travel, holidays and the bustling activities of the upcoming months begin to occupy the minds of many. It is also an opportune moment to reflect on your estate plan and decide if any aspects require careful attention before the year’s end, including contemplating annual gifts.
In 2023, the annual federal gift tax exclusion is $17,000. This means that you can give $17,000 to as many people as you would like without tax consequences. If you are married, you and your spouse can give $17,000 each – even to the same recipient.
Along with individual gifts, consider whether you would like to make any tax-free gifts this year, such as gifts to 529 college savings plans or to trusts.
Gifting Business Interests
If you want to gift business interests, it is important that you obtain a current valuation of your business to understand the tax liabilities that would apply to the transfer of interests. You may also be eligible for discounts based on the nature and size of the business and gifts. By enlisting a company to value your business interests before the end of this year, you can get the information needed to make a strategic decision about any 2023 gifts.
Back-to-School: Estate Planning Tips for Parents and College Students
It may be hard to believe that your child is heading off to college this fall. As you pack the car with dorm necessities and household staples, the last thing you are probably thinking about is your child’s Powers of Attorney. While college is a time for young adults to grow independently, preparing Powers of Attorney for Health Care and Finances can provide peace of mind for parents and children alike.
Your child is legally considered an adult upon reaching age 18, and you as a parent are no longer authorized to access their medical records or individual financial information. Now is the time for your college-age child to execute Powers of Attorney for Health Care and Property and a HIPAA authorization, to identify agents who can step in to assist with important decisions in the event of an emergency.
Power of Attorney for Health Care
A Power of Attorney for Health Care will allow your child to designate one or more agents to act on their behalf in medical decision-making and to access medical records if they are injured, become ill or are incapacitated. This will allow an agent to step in and help with medical needs and consult with doctors, if necessary. Many young adults name their parents as agent but if your child is moving out of state, they may prefer to appoint someone local as agent, such as another family member or other trusted individual.
Power of Attorney for Property
Parents can no longer access their child’s individual financial accounts when they reach age 18. A Power of Attorney for Property designates an agent to deal with financial matters in the event of an emergency. If your child is incapacitated, you or another trusted person can be named as agent to make financial decisions on behalf of your child. For college-aged kids, naming an agent may also prove useful in the event of incapacity for matters such as dealing with residential leases entered into by your child.
It is important to note that these documents vary by state and the proper documents for your child’s new state of residence should be executed as they return to school this fall.
As a parent of an adult, you no longer will have access to your child’s medical records without their permission. A HIPAA Authorization Form will grant you permission to access medical records when you are acting as your child’s agent under a Power of Attorney.
If your child has substantial assets in their own name, has a life insurance policy or a Roth IRA reaching the age of majority, it is a good time to talk to your child about planning for these assets. Based on your child’s asset profile, it may be worthwhile to execute a simple will to protect their assets or to update beneficiary forms on any insurance policies or accounts to protect their assets.
HMB’s Private Client, Trusts & Estates Group is here to assist in preparing Powers of Attorneys for your children and to guide you in your review of your existing estate plan and end of year gift giving strategy. Please reach out to a member of our team to discuss your existing plan and review any changes that may be necessary to refresh your estate plan to match your current needs and wishes.