As the COVID-19 pandemic continues, many people are finding themselves wishing they had created an estate plan earlier. Remember, without the proper plan, an Oklahoma court will be required to make many difficult decisions about your estate and how your assets are transferred. Given various changes to several critical aspects of estate planning law, however, it can be challenging to determine what strategy works best for you. The following discusses just some of the advantageous estate planning tactics that you might consider.

Think Twice About Estate Planning Tactics

The passage of the Setting Every Community Up for Retirement Enhancement Act of 2019 disrupted IRAs by requiring most non-spouse beneficiaries to receive assets from the account in accordance with a 10-year window. Previously, beneficiaries could stretch out the duration of IRA distributions over a lifetime. Beneficiaries who are not more than 10 years younger than the account owner, however, can still distribute assets based throughout  that individual’s life expectancy. As a result, you might wish to reconsider how asset distribution through your IRA is made.

Utilizing a Roth Conversion

The same 2019 legislation also increased the age for required minimum distributions from 70 and a half to 72. Individuals younger than this age can still take a voluntary distribution and convert it to a Roth IRA. While non-spouse beneficiaries are still required to deplete the account within 10 years, Roth distributions are tax-free.

Make the Most of the Annual Gift Tax Exclusion

Each year, every person in the United States is permitted to give any one individual a gift of up to $15,000 without facing gift taxes. Gifts up to $15,000 can be made an unlimited number of times. Couples are permitted to pass on up to $30,000 as a gift without facing taxes. These gifts can be an excellent way to begin passing on an estate to loved ones.

Directly Pay for Medical or Education Expenses

Another potential option to reduce future estate taxes is to write checks for someone else’s education or medical expenses. This is because paying for education or medical expenses does not count towards the annual exclusion or estate tax exemption. 

Create an Irrevocable Trust for Your Spouse

Irrevocable trusts require a person to give up control of their assets. Creating these trusts, however, is one of the best ways to take advantage of current high tax exemptions. While you as a couple can still access the fund, you pass money out of an estate without facing gift taxes. Spousal lifetime access trusts are one type of irrevocable trust that names a spouse as a beneficiary and children as remainder beneficiaries.

Speak With a Knowledgeable Estate Planning Attorney

Remember, estate planning is not a one-size-fits-all process. Instead, what works best for one person’s estate might present a disadvantage for another. If you need help creating an estate plan, you should not hesitate to speak with an experienced lawyer. Contact attorney Jim A Lyon today to schedule a free case evaluation.