Updates to estate plan might be necessary in New Year

On behalf of Scaringi Law posted in Estate Planning on Wednesday, December 23, 2015.

While having an estate plan is certainly better than having none, an out-of-date will is not entirely advisable either. After all, if the two certainties in life really are death and taxes, failing to keep up with changes to estate tax law can wreak unintended havoc on a person's estate. With the end of the year drawing to a close, people in Pennsylvania might be well advised to review any upcoming estate law changes and adjust their estate plan as necessary.

At least two things will remain the same in the world of estate planning as the calendar flips over to 2016. Currently, up to $14,000 can be gifted to anyone without facing taxation. Gifts given to a spouse, of course, are not subject to being taxed in the first place. Portability -- or being able to "port" the remainder of a deceased spouse's federal estate tax exemption to the surviving spouse -- is also staying put as is. Currently, a surviving spouse can transfer up to nearly $11 million worth of assets and not have to worry about any estate tax.

What is changing, though, is the maximum lifetime exclusion amount for estate tax and lifetime gifts. The law concerning gifts made throughout a person's lifetime as well as the transfer of an estate to an heir mandates that the act of doing so is tax free only up to a certain amount. Annually, the max amount has risen dramatically and, as of 2016, will be at $5.45 million, a significant increase from 2005 when it was capped at $1.5 million.

Handling and minimizing estate taxes is typically a high priority for those in Pennsylvania who are establishing their first estate plan or simply updating an old one. With changes to estate tax law rolling through nearly every New Year, an annual review of all documents, wills and trusts is typically well advised. Doing so in as timely a manner as possible can help ensure that there are no overlooked inconsistencies in a plan that might create problematic issues for those left to handle the estate after a loved one has passed.

Source: fool.com, "Estate Planning in 2016: Here's What You Need to Know", Dan Caplinger, Dec. 11, 2015


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