In 2017, a wide-sweeping tax reform was enacted that had an impact on many aspects of the pre-existing tax laws. Residents of New York may have realized that estate planning was also impacted during the change. The stress of estate planning under these new tax guidelines can be reduced if certain aspects of the change are more clearly understood.
Flexibility focus
A large number of the changes that were put in place concerning the federal estate planning tax exclusion are set to expire in 2025. The fact that these exclusions won’t be in place within the next few years deepens the need to build flexibility into trust arrangements. Due to a myriad of reasons, this flexibility is especially important to those whose estates range in value between $5 million and $22 million.
Don’t hit the panic button
It’s easy to believe that these changes mean all prior planning needs to be scrapped and the entire estate plan needs to be redone from the ground up. This knee-jerk reaction can lead to more issues than it solves. It’s important to realize that there is a reason that the original plans were put into place, and there is a good chance that the existing estate plan won’t be impacted in a few years.
Strategic splitting
The concept of splitting a gift in an estate plan allows a gift that is being given by one spouse to be viewed as though it is being given by both. Depending on the monetary value of the particular gift, it may or may not make sense to treat it as a split gift.
When dealing with estate law, it may be beneficial to work with an experienced attorney. This attorney may help review their client’s assets, gather information about the newest tax laws and even put their client in touch with financial professionals.
