Here is some good news for those of you who are contemplating an update to your estate plan. The process has become a bit more predictable than it used to be.
In 2013 Congress passed legislation that made the estate tax exemption of $5 million permanent and created a provision to adjust this figure yearly for inflation.
In 2015, Americans can leave up to $5.43 million upon death without owing any estate tax. What’s more, spouses can combine their exemptions so that they can leave or give away almost $11 million upon death.
As a practical matter, this means that roughly means 99.5% of estates will not owe any federal gift or estate tax.
The permanent exemption ended the worry that some Americans experienced about how much they could protect from what seemed to be yearly changes in the estate-tax exemptions – and in some cases extreme changes – when they died. The stability of the estate tax, however, doesn’t eliminate the need to periodically review your estate plans.
Here are some good reasons why you should take an annual look at the provisions of your estate plan:
You may also want to modify or create a living will, which expresses how you want to be treated in certain medical circumstances including life-sustaining treatments in the event you are terminally ill or injured.
You may also want to create or change your durable medical power of attorney that names someone to step in for you in the event that you are incapacitated either permanently or temporarily.