As the presidential election approached, there was substantial discussion about what estate planning actions should be taken before the end of the year. Behind this decision is the notion that, provided the Democrats win the Presidency and take a majority of the Senate, there very well could be a substantial reduction in both the amount of estate and gift exemptions. The following reviews some critical estate planning issues that you should consider as 2020 comes to a close.
Exemptions Will Eventually Change
Despite current exemptions, there are still many individuals who have taxable estates. Even if the exemption does not immediately revert, it is still set to switch back to its pre-2018 levels in 2026. Individuals with exempt estates can benefit from making tax-exempt gifts now. For people who would not owe exemptions at death now but who would at the time of their death, it is important to consider that there are multiple ways to structure estate planning transfers, including trusts.
Beneficiaries Can Claim Trusts
To transfer assets, you might decide to utilize trusts, but remember that trust beneficiaries can disclaim gifts to trusts. In such cases, trusts can utilize terms for alternative dispositions. Some unanswered questions persist, however, about these disclaimers. For example, a transfer that would result in the required assistance of a court-appointed guardian would be undesirable to many individuals. To avoid such complications, it is critical that the terms of a trust are routinely reviewed by a knowledgeable estate planning attorney.
Remember, even if a child’s descendants are remainder beneficiaries, it is not automatically clear if all beneficiaries would be required to disclaim such an asset or if a child’s disclaimer would be enough to negate a gift. If any remainder beneficiaries are minors and would need to disclaim assets, this might necessitate the appointment of a guardian ad litem.
Do Not Forget About the Unlimited Marital Deduction
As you review your estate plan, remember that the unlimited marital deduction can be of great value to married couples. For gifts made before the end of the year, gift tax returns are not due until October 21. A couple might decide that certain transfers are not desirable while a certain party is alive or that such a transfer should be made. Additionally, investments can be made in such a way to minimize income. If you plan on transferring assets, remember you have options about not just to whom but also when such transfers are made.
Speak With an Experienced Estate Planning Attorney
The estate planning process is not easy, but the assistance of an experienced estate planning lawyer can help greatly. Contact attorney Jim A Lyon today to schedule a free case evaluation. During an initial meeting, attorney Lyon will help you identify your estate planning goals. Once retained, attorney Lyon can help to make sure that each of your estate planning goals is met.