It is never too soon to starting thinking about planning for our children’s future, for our retirement, and for how we will make sure our children will reap the benefits of our lifetime of hard work. Accordingly, you should take a moment to take stock of your assets and determine what estate planning strategies you can employ to make sure that your assets are handled in the way you want when the time comes.
To help you take stock, this blog will cover the 5 Top Estate Planning Tips for 2019. If anything, these tips will help you start thinking about the kind of estate planning you may want to do in the near future. Also, these tips cover the most recent changes in the law of estate planning, so you have some cutting-edge information to work with.
Before discussing the 5 Top Tips, the best advice is always to engage the services of an experienced, professional, reliable estate planning lawyer. If you live in West Palm Beach, then you should rest easy in the knowledge that there are a number of great estate planning lawyers in West Palm Beach.
Among those great estate planning lawyers in West Palm Beach, consider contacting us at Doane & Doane. We specialize in a personalized approach to estate planning to make sure that all of your wishes are part of the plan. Let us help you plan your estate for your and your family’s future. Call us for a free consultation today at 561-656-0200.
Now let us get to those Top 5 Estate Planning Tips for 2019.
Tip #1 – Gift and Estate Tax Exemptions Are Only Temporary, Use Them While You Can
There have been a vast number of recent tax changes on the federal government level. Of note, the Tax Cuts and Jobs Act, signed into law in December 2017 has opened up many opportunities related to estate planning, though some may be only temporary.
For example, the Tax Cuts and Jobs Act increased the exemption amount for gift and estate transfer taxes to $11.4 million, from a previous $5 million. Yet, the increased exemption only lasts on transfers made on or before December 31, 2025.
What that means is that you can transfer up to $11.4 million in assets as a gift, or through your estate, without incurring any tax liability at all. If you are transferring assets as a married couple, the exemption is doubled to $22.8 million. Such transfers can only occur until 2026. Therefore, unless the law is changed again, the Tax Cuts and Jobs Act exemption amount will decrease.
This change in the law, which became effective at the beginning of 2019, means that you have a temporary opportunity to transfer significant wealth to future generations without paying federal estate or gift taxes.
Tip #2 – Consider State and Local Taxes
The changes from the Tax Cuts and Jobs Act in general have had a ripple effect on taxes at the state and local level. Specifically, the Act caps a maximum itemized deduction of $10,000 for state and local taxes. Fortunately, this change does not dramatically impact Florida, but states including California, New York, New Jersey, and Connecticut, (which all have high income tax rates) are negatively impacted.
Therefore, there may be some litigation involving the Tax Cuts and Jobs Act, the results of which may impact your own estate plan. That is another reason to consult with an estate planning lawyer in West Palm Beach, to make sure that any strategy you already have set up is protected.
Tip #3 – Charitable Contribution Bunching?
The Tax Cuts and Jobs Act gives taxpayers the ability to deduct charitable contributions of cash up to 60 percent of their adjusted gross income. That number is a 50 percent increase from the prior law. Therefore, you may want to consider speeding up your donations to charity. That is so you can offset any additional tax liability you face based on the Tax Cuts and Jobs Act’s reduction in the ability to itemize your deductions.
Thus, if you regularly make charitable donations, then you might want to talk to an estate planning lawyer to consolidate (or bunch) your gifts to charity into a single year, rather than making the donations over several years.
Tip #4 – The Basics of Basis Planning
If you have a trust with assets that have a low tax basis relative to their fair market value, then you may want to think about changing those assets for cash or other assets with a higher tax basis. That is because under the current law, low basis assets will get a “step up” in basis to match the fair market value of the asset. Your beneficiaries can benefit more from a the “step up” at the time you pass away if the asset has a higher tax basis. Also, changing a trust asset from low tax basis to high tax basis is not a sale, and thus does not trigger any income tax.
Tip #5 – Use the Temporary Increase in Generation-Skipping Transfer Taxes
As you may know, transferring assets to a grandchild, thereby skipping a generation, had tax benefits back in the day. Now, such generation-skipping transfers are subject to gift and estate taxes. However, as discussed above the Tax Cut and Jobs Act raised the exemption amount to $11.4 million, and $22.8 million for a married couple.
Not only should you take advantage of this exemption before it sunsets in 2026, but you can create a generation-skipping transfer trust to continue in perpetuity. Check with an estate planning lawyer in West Palm Beach to ensure that this is still possible in Florida.
Check-In With Doane & Doane, the Estate Planning Lawyers in West Palm Beach
At Doane & Doane, we have vast resources and experience with estate planning issues. If you think it is now time to get started on your own estate plan, give us a call. Our advanced estate planning lawyers are ready to assist you and get you that peace of mind you need. Call Doane & Doane today for more information at 561-656-0200.