Take Time to Review Your Estate Plan

The “Taxpayer Relief Act” signed on January 2, 2013, permanently sets the estate and gift tax exemption at $5,000,000 and the top tax rate at 40%. The exemption amount is adjusted annually for inflation, which puts the 2012 exemption at $5,120,000 and the 2013 exemption at $5,250,000. The annual gift tax exclusion for 2013 is set at $14,000 per recipient.

Now that the rules have been made “permanent,” take the time to review your estate plan to make sure it still accomplishes your wishes.

With the higher exemption amount, fewer estates will be subject to tax, and perhaps yours falls short of the tax threshold. But regardless of the size of one’s estate, everyone needs the following basic documents – updated for the current rules and your particular circumstances:

  • A will that specifies who is to inherit your assets and who is to be the guardian of any minor children you have.
  • A power of attorney naming someone to handle your financial affairs if you become disabled or seriously ill.
  • A health care directive (living will) stating your wishes should you become terminally ill or permanently unconscious.
  • A financial inventory listing such things as bank accounts, income sources, insurance policies, and other assets.

Your estate plan review should include checking your exposure to state inheritance taxes and an update, if needed, to beneficiary designations on such things as IRAs and insurance policies.

For help in getting your estate plan in order, please contact us and your attorney.