Your life is constantly evolving. Your estate plan should evolve in sync with that journey. Here are some considerations to talk about with your Rehmann team of estate planning advisors.
Family Events
Marriage, re-marriage, divorce, birth and death of a loved one are not just emotional events; they also have a significant impact on your estate plans. Changing, growing, and blended families present unique estate planning considerations, including a desire to take care of certain members of your family in distinct ways.
For instance, you may want to preserve specific assets for the children of your first marriage. Perhaps you want to ensure your current spouse is financially comfortable while also providing for a former spouse and co-parent to your children. Or perhaps you’d like to give a current spouse or adult child more responsibility and control.
Any change in family dynamics is a good time to review investment, insurance, bank account, and trust beneficiary designations. Another important life event that can impact your estate plan is the marriage of a child to a spouse who brings substantially lower income and assets to the union. It may be important to you to ensure your estate passes to and remains in the control of your child, rather than becoming marital assets that could be disputed in a divorce proceeding. While this may be unpleasant to consider, planning ahead now can relieve your beneficiaries of future stress.
Health Considerations
Living longer can mean more time with our loved ones. It can also mean living with physical and mental health challenges that limit our ability to capably manage our affairs. Consider this: Many years ago, you gave durable power of attorney to your spouse at the time, and you have since remarried. The reality is that in the event of your incapacity, your former spouse may still have the authority to make decisions regarding your finances and estate. Reviewing and updating control designations while you’re able can mitigate the risk that your assets will not be distributed according to your wishes.
Financial Planning
If you inherit substantial assets, take a pause before spending such a windfall. There are many options available to you now, for the near-term and for the future. Consider covering educational expenses for your children, investing for your retirement, or exploring a satisfying opportunity to establish a donor-advised fund or private foundation to reduce future estate and gift tax liability while fulfilling a dream to leave a legacy through charitable giving.
On the other hand, a decrease in the value of an estate or indebtedness can introduce the risk of depleting assets as creditors pursue them to satisfy their claim. A trust can help avoid probate, a potentially costly and time-consuming process and might be the right solution to distribute assets as you want; not according to state probate laws.
Legal Landscape
Without congressional action the Tax Cuts and Jobs Act of 2017 (TCJA) will sunset at the end of 2025. In the meantime, TCJA offers individuals and couples with assets a unique opportunity. At the outset, it nearly doubled the individual lifetime estate and gift tax exemption (from $5.49 million in 2017 to $11.18 million in 2018.) In 2024, the potential benefit is even greater: Adjusted for inflation, the exemption has increased to $13.61 million, allowing a combined exemption of $27.22 million for married couples. Is your estate value above these thresholds? Don’t wait until 2025. Start discussing your options now to protect your assets for future generations.
Remaining engaged with your trusted team of advisors can ensure your estate plan is up to date, reflects your wishes, and mitigates tax liabilities. Our team of experts continually monitors legal, tax, and other developments to provide you with a curated strategy for and around your estate plan, giving you a satisfying experience and peace of mind.
Contact Adam Garvey CPA, CFP®, MST at [email protected] or 231-946-8983 for assistance and advice.
Securities offered through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Wealth, a Registered Investment Advisor.