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  • Writer's pictureJoshua B. Beisker

The Start of a New Year is the Perfect Time to Revisit Your Estate Planning Documents

There is no time like the present for individuals to review, revise and/or implement their estate planning strategy. Even if you believe that your estate planning documents are completed and you have a sound estate planning strategy in place, it is prudent for you to thoroughly review your documents to be certain that the plan you think is currently in place is the plan that will actually take effect upon your incapacity or death.

When reviewing your estate planning documents, some relevant considerations may include:

  • Will the recent changes to the tax law impact your current estate plan?

  • Is your current estate plan structured in such a way so that it can be administered efficiently to minimize expense or controversy?

  • Do you have a Financial Durable Power of Attorney and a Health Care Proxy/Living Will that expresses your wishes to allow your appointed Agents to make financial and health care decisions in the event of your incapacity?

  • If you own a business, have you implemented business succession planning that will allow the business to continue operating seamlessly after your incapacity or death?

  • Will your retirement account(s) pass to your intended beneficiaries in a tax-efficient manner?

  • Do you have a Will, Trust, or other planning vehicle that will allow your assets to pass to your intended beneficiaries after your death in a tax-efficient manner?

Changes to the Tax Law

January 1, 2019 saw significant changes to both the Federal Estate and Gift Tax law and the New York State Estate Tax law, some of which include:

  • The increase of the Federal Estate Tax Exemption amount to $11,400,000 per individual

  • The increase of the annual exclusion amount for Federal Gift Tax Purposes to $15,000 per individual

  • The increase of the New York State Basic Exclusion Amount for Estate Tax Purposes to $5,740,000 per individual.

If you implemented your estate plan prior to 2019, the increased state and federal estate tax exemption amounts could potentially lead to unintended consequences.  By way of example, assume your estate planning documents were completed in 2001 when the federal and New York State Estate Tax exemption amounts were each $675,000.  Assume further that the estate plan stipulated that the largest amount, if any, that would pass free of federal and state estate tax would pass to your children, with the rest of the estate assets passing to your spouse.  In 2001, the children would have received only $675,000, but in 2019, the children will receive $5,740,000 (the NYS Basic Exclusion Amount).  If your estate in this example is equal to or less than that amount, you currently would have unintentionally disinherited your spouse because your estate plan had not been updated since 2001.

This is just one of many unintended consequences that could potentially occur by failing to review and update your estate plan because you believe that the plan that you put in place years ago will still yield the same results today as it would have in years past.

In light of the recent changes in the tax law and the increased state and federal estate tax exemption amounts for 2019, it is advisable that you kick off the new year by dusting off and reviewing your estate planning documents to make sure that your planning goals can still be met with the strategy implemented under their current planning documents.  If it can’t, then updating the planning documents is highly recommended! 

As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

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