Be Aware of New Estate Planning Laws

Figuring out how to pass on your assets to your heirs is a key part of the estate planning process. But what’s the wisest path, since tax laws change from time to time?

Beneficiary designations on life insurance and retirement plans are one way to keep away from probate, that time-consuming process where the courts oversee the distribution.

A revocable grantor trust is one tool to help people avoid probate, says a story on

You, as the grantor, or person making the gift, convey assets to yourself as the trustee in charge of the trust. You have control over the assets during your lifetime. You can alter the trust or revoke it. When you did, your successor as trustee conveys the proceeds to beneficiaries.

In the past, people would have to spend time deciding whose trust would e fundied with what assets. They would typically set up two trusts for married couples so they could pass along double the amount of tax-free proceeds to their kids – now $5.43 million per person, or $10.86 million from the two parents.

The problem was when one spouse dies and that person’s trust goes to the survivor. When the second spouse dies, the $5.43 million ceiling applies.

But the IRS eased the rules, allowing for portability. It means the surviving spouse’s trust can use any unused portion of the deceased partner’s exclusion, a benefit for heirs. The change is prompting many people to redo their trust as a single one. But there can also be disadvantages. The article suggests discussing the matter with your estate planning attorney. Recent changes to state and federal laws have made certain documents outdated, it says.

If you have questions about estate planning, feel free to contact us for a consultation at (626) 696-3145.

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