How New Tax Laws Will Impact Estate Planning in 2018
With 2017 now relegated to history, including Congress passing (and President Trump signing into law) the Tax Cut and Jobs Act, the question as we look ahead to 2018 now becomes: how do these new tax laws affect my estate plan? With that in mind, let’s consider a few things to watch regarding estate planning, so you and your family can be completely protected.
New Tax Laws and Key Considerations for 2018 Estate Planning
- The Death Tax: The death tax has been in a state of flux ever since the early 2000s when the Bush administration’s first tax cuts changed the exemption and tax rates. The recently-passed Tax Cuts and Jobs Act is the latest significant change. Starting January 1, 2018, the estate tax exemption amount will double to $11.2 million per person (married couples have $22.4 million of combined exemption). Like the current exemption, this amount will adjust annually for inflation. However, this enhanced exemption expires on December 31, 2025, at which time it will return to an amount similar to the $5.49 million per person exemption we’ve had in 2017. Similar to what happened when the Bush tax cuts phased in (and were scheduled to expire) during the 2000s, we’ll face the same situation over the coming years – the law provides a deadline and timetable, but political activity may result in something entirely different. Regardless of your stance on this new tax law, if you have a plan based around the now-old rules, it’s time to visit with us, so we can make sure the plan still meets your needs and goals while maximizing the benefit to your family, charities, or other beneficiaries.
- Incapacity Planning: What happens if you suffer a catastrophic injury, but you don’t die? Historically, much of estate planning focused on what happened to your assets after your death. With cognitive impairment at near epidemic proportions, you must plan for the contingency if you survive a catastrophic injury, but require assistance managing your affairs. Depending on your circumstances, this could range from a relatively simple matter of ensuring you have a trusted person authorized to make decisions to extensive planning to become eligible for help paying for nursing home care. Either way, now is the time to work with us to ensure that your plan protects you, even if you don’t die.
- Giving Your Family Lifelong Financial Security: Although you may not have a “large” amount of wealth now, you probably have an IRA or a life insurance policy. A modest IRA or life insurance policy could be the foundation for lifelong financial security for your family. To make this a reality, you need to set up your affairs with the proper structures to ensure that your hard earned life-savings are not depleted by high administrative cost, taxes, and the risk of financial immaturity or ignorance. McDonald Law Firm is here to help you ensure that the savings you’ve spent a lifetime building will be there for your family.
- Fixing Broken or Old Trusts: Many people have inherited assets from parents, aunts, uncles, and others through a trust. Some of these trusts may use old strategies or be expensive or difficult to administer. The law recognizes that old trusts may need some refreshing. There are many options available to modernize an old trust, and the best way to get started is to meet with Andre O. McDonald, a knowledgeable Howard County estate planning attorney so we can explore which option is best for you and the trust you inherited.
With the new tax laws and other changes taking effect in 2018, it will likely be an exciting and dynamic year. No matter where you are on the estate planning journey, carve out some time to talk with us to make sure that you and your family are fully protected. Call McDonald Law Firm today at (443) 741-1088 to schedule a no obligation consultation.
DISCLAIMER: THE INFORMATION POSTED ON THIS BLOG IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO CONVEY LEGAL OR TAX ADVICE.