The end of the year gives individuals in Maryland and other locations the chance to review their estate planning goals. One of the main considerations is estate administration and how these individuals wish for their estate to be handled if they become incapacitated or if they die.
One of the major goals of estate planning is to minimize the amount of taxes that a person's estate would have to pay after his or her death. The American Taxpayer Relief Act of 2012 decreased the amount of federal taxes that most estates would have to pay. It provided an increase in the lifetime estate and gift tax exception to $5.25 million in 2013 and $5.34 million in 2014. Before the act was passed, the exemption was set to expire and revert back to $1 million. Many individuals had previously established their estate planning documents when the exemption was much lower. The legislation also made permanent the portability of that exemption amount between spouses.
Individuals may wish to review their existing estate plans so that they still make sense with these new changes. Additionally, they should also review the designations of beneficiaries that have been assigned on retirement accounts, 401(k) plans and insurance policies in case a new life change like a marriage or birth of a child affects these designations. They should review their wills, trusts and other estate planning documents to ensure that their wishes are still the same and clearly expressed.
Individuals who wish to change their estate plan to take advantage of the higher exemption rates may wish to discuss their plans with an estate planning lawyer. The attorney may provide suggestions to minimize tax expenses and to maximize the client's wishes for asset preservation and distribution.