The Change in Estate Planning

As you all know, I am an estate planning attorney. The goal of my practice is to keep my clients out of court, protect Estatetheir assets from their family, and accomplish these goals in the most tax efficient way possible. Sometimes, changes in law provide us with new planning opportunities. Today, I would like to share with you a very big change that will affect almost everyone’s estate plan.

For years, the focus of estate planning has been avoiding the estate tax. Most trusts have provisions creating a credit shelter trust after the death of the first spouse to make sure the couple efficiently used their estate planning exemptions. Good, solid estate planning. But recently, things have changed. The estate tax exemption is now $5.34 million dollars per person, and this amount is going up. That means individuals with a net worth of less than $5.34 million dollars will pay no estate tax. For couples, its double – an amazing $10.38 million. So you see, the estate tax is simply not applicable to most families.

Good news, but that does not mean we are out of the woods. The good estate planning of the past has created a potential income tax bomb for the unwary. For virtually all of those trusts that created a credit shelter trust after the first death, and trust me, almost all trusts have that provision, there is a built in capital gain problem that absolutely needs to be fixed. With income tax rates now reaching as high as 44.3%, and the capital gains tax rate at 20%, this tax bomb needs to be addressed. The good news is that the tax bomb can be fixed, but you will need to get your trust reviewed and amended.

Fortunately, we are offering a free trust review to anyone who thinks they may have a problem with their trusts. Please give my office a call.

This is Jamie Kalicki. Remember, for all of your estate and business planning needs, its Kalicki Collier.