As we move towards Spring in 2018, there are a number of developments in the new tax law and other laws to keep in mind as they may impact you and your family significantly.
- New Tax Plan: How is your current estate plan affected by recent tax legislation? The good news for many people is the new Tax Act raises the tax exemption to an adjusted $11.2 million until 2026. Previously executed AB marital trusts may not serve the same tax saving purposes, but can remain as your estate plan. Consider if you wish to make any changes.
- Lifetime Gifts: If you are giving the property to another person, you can do so within your lifetime tax exemption under the tax law. However, it is important to remember that any gift is not given a ‘stepped up basis,’ meaning the recipient is subject to capital gains tax based on your original acquisition cost. A common and costly mistake occurs when people quitclaim their property deed or add another person to the title, causing a potentially large tax liability.
- Tax Qualified Accounts: Give careful consideration on naming beneficiaries for all Inherited IRA’s and deferred compensation plans which do remain viable in the new tax law. While a spouse would be named a primary beneficiary in most situations, major tax consequences under the tax law may result depending on how the successor beneficiary is named, whether it is a nondisabled adult or a trust.
- 529 Education Plans: The tax law expands the tax and estate planning benefits of these education savings plans. Now tax-free distributions from 529 plans can be used for elementary and secondary school expenses, not just higher-education expenses, making them even more valuable.
- Disability: Any of us can acquire a disability through accident or illness. Are you prepared? Your estate plan should include current Financial and Health Care Power of Attorney documents so that your chosen agent can take care of your finances and make health care decisions for you in the event of disability. If one of your beneficiaries has a disability at your death, what inheritance you leave them could eliminate their public benefits such as Social Security and Medicare or those gifts can be taken by the government as reimbursement for those benefits. Your Living Trust can protect the inheritance with Special Needs provisions. If you are uncertain whether your Trust contains those provisions, call us today for a review.
- Living Trusts: If you do not have one, you need one. If you have one, make sure there are no changes in beneficiaries or trustees status or updates you wish to make concerning current or possible future disability protection, or if you are contemplating a move to another state. Be certain you have titled all your property and nontax qualified financial accounts in the exact name of your trust. If you are ready for a review, call us and schedule an appointment.
- Insurance Policies: A reminder, for all property (auto, home, commercial, act.) transferred into a Living Trust or an LLC or corporation; notify relevant companies for the title, homeowners, vehicle, and title insurance coverage.
- Title Insurance: When you purchased your residence, vacation or investment property you purchased title insurance at the closing. Title insurance is a policy that ensures your complete ownership of the property. You would have had a survey taken, and the title company would have conducted a thorough search of all public records to ensure there are outstanding liens, filing errors, act. A title insurance policy would have been issued to insure you against any errors or omissions that would affect the property title. For title insurance, you can decide for each property if you wish to obtain either an Additional Insured Endorsement for continuing coverage, depending on the probability of unknown title issues that might arise in the future or at the sale of the property. You could also obtain a new policy to protect against any title issues that may have occurred since the date of purchase and cover any increase any value of the property from the original issuance date of the policy.
You can obtain free quotes for all relevant insurance needs through Comprehensive Benefits Plan of America,(CBA).
It is hard to keep up with changes in the law, and they can be confusing. If you have a question about these new laws or reminders, or any other legal issues, feel free to call me at any time.
This blog entry has been created for information and planning purposes. It is not intended to be, nor should it be substituted for, legal advice, which turns on specific facts, as well as laws in specific jurisdictions. No reader of this blog should act or refrain from acting on the basis of any information included in, or accessible through, this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the reader’s state, country or other appropriate licensing jurisdiction.
Disclaimer/Advertisement: Comprehensive Benefits of America, LLC, (CBA) is a for-profit, limited liability company, owned, in part, by Tom Tuohy, offering members access to products, services, and financial wellness resources. Membership is free and open to the public. Certain partners of CBA pay CBA an affiliate or commission fee, in return for products or services sold to CBA members.