START OFF YOUR NEW YEAR WITH A PLAN
2019 is behind us and many are looking forward to a brighter, happier, healthier 2020. There is so much happening in the world right now that we can’t control — the government shutdown, Brexit, stock market fluctuations, to name just a few. What can we each do in our own lives to ensure our own family is protected if an unexpected crisis happens in 2020 or future years?
We can experience a life-changing, or life-ending, accident or illness at any time and at any age. So make a plan.
A basic estate plan for everyone over the age of 18 with good mental state should consists of:
- Advance Directives for Health Care (i.e., Health Care Power of Attorney, Living Will, HIPAA Authorization)
- Property (or Financial) Durable Power of Attorney
- Simple Will
If you do nothing else, get these documents in place, and be sure your loved ones also have them done! Why? Having these properly prepared and executed documents in place will guide the process in the event of a death or disability, which will help make an extremely difficult situation a little easier to manage.
In addition to these basic documents, most people we meet need to do a little more to fully provide for their family. The reason? Protecting assets for your children or other beneficiaries, and avoiding unnecessary court costs and legal fees upon your death or disability, will not be accomplished if you only do these basic documents.
As of January 1, 2019, there is a federal estate tax exemption of $11,400,000 and the Illinois estate tax exemption remains at $4,000,000. This means that many people do not need to worry about paying federal estate tax at their death, but you may be surprised by the time you add up life insurance policies, real estate, retirement accounts, CDs, brokerage accounts, and other assets, how close you may be to the Illinois exemption and having to pay Illinois estate tax.
Even if your assets do not add up to anywhere near these exemption amounts, there is a lot of planning you can, and should, do to protect yourself and your family from unnecessary expenses and disputes, creditors, and divorce, and possibly take advantage of income tax and capital gains tax planning strategies that are available.
Did you do a Living Trust and/or a Will years ago and think you’re all set? Consider this — If you are married and have estate planning documents (e.g., revocable living trusts with “A-B trusts” or “Marital and Credit Shelter/Family Trusts”) that were done more than a few years ago, back when the federal estate tax exemption was somewhere between $600,000 and $2,000,000, or even when it was around $5,000,000, you are likely to have a result that you do NOT want when you or your spouse dies. This is because those trusts were designed to work for you when we had a much lower estate tax exemption, but will likely not provide the best result under our current tax laws. You need to update them to reflect the laws in effect today. Read our next blog for further explanation of this problem.
It’s the end of January, it’s cold outside, the holidays are over, and tax returns must be filed. Although there is much uncertainty in the world, we all know there are the two certainties – Death and Taxes. You pay your taxes every year, so don’t ignore the other.
Schedule an appointment now with one of our estate planning attorneys to begin the discussion. We are here to help you figure out what you need to do so you can rest assured that you have taken steps to provide for yourself and your loved ones.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law, Collaborative Divorce & Mediation.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.