The New Estate Tax Act:  Estate Planning for Small Estates - The New Checklist

Estate Planning, Wills, Trusts, Trusts and Elder Law Planning for Families and Individuals with Assets and Life Insurance of Less than $1 Million Dollars


On December 17th 2010 Congress suddenly, and rather unexpectedly enacted a radical change in the federal estate tax laws for those dying in 2010 and for those both alive and deceased in 2011 and 2012.


And, while many of these very important changes are only temporary, they offer some unique planning opportunities for people of all levels of wealth.  Even if you think that your existing will and/or trusts are still valid under this law, most commentators including the Wall Street Journal are recommending that you have a review of your wills and trusts to see if the new laws have changed the ways in which your planning will work.


Furthermore, we are recommending that families and individuals with wealth of less than $1 million dollars review their estate plans to make sure that they are updated, and that they consider nursing home protect plans and other opportunities that may now be easier than ever to implement since federal estate tax issues are less important and unlikely to interfere with such plans.


In addition, most wills and trusts always focused on avoiding the federal estate tax even if it triggered additional capital gains taxes, because the federal estate tax rates were so high and capital gains tax rates were historically low. 


Under the new law and during this time of flux when the future of the tax and the capital gains tax rates are uncertain, it may now be very desirable to enact a plan that is flexible enough to allow for protecting from estate taxes and from capital gains taxes if there is no federal estate tax.


Before this year, this has not been an issue for most people doing estate planning.  So, if your documents contain trusts, disclaimer trusts, of formula trusts for a spouse or children it may make sense to review them.


Does all of this seem confusing?


If so, you’re not alone.  Many estate lawyers, and general practice lawyers are still making their way through these new laws and some admit that they are as confused as you.  However, we have invested an enormous amount of time, energy and money in reviewing these laws and getting high level review of these new laws.


In fact, David Frees, Chairman of the Trust, Estates, and Wealth Preservation Section of the firm just returned from an investment of five full days of lectures, analysis, and brainstorming (at the Heckerling Institute of Estate Planning) with high level attorneys who focus their practices on these issue.


And, we have invested significantly in upgrading software and new tax and estate planning services to deal with these changing laws and the tax issues surrounding them.


In short, we can suggest the following:


1)    If your estate planning was done before January 1, 2011 consider having it reviewed in light of the new law.

2)    In particular, make sure to discuss whether or not your trusts or will should be amended to deal with the possibility of no federal estate tax and the reinclusion of assets for a step up in basis to avoid capital gains taxes for your children

3)    Consider larger gifts including but not limited to trusts to protect your assets from nursing home spend down since such gifts are easier than ever under the new law.

4)    Make sure that your power of attorney is updated to allow for planning changes as the law changes since it is slated to change again in 2013.

5)    If you are in a second or third marriage, and/or have children from a prior marriage make sure that the formula clauses used in many wills still carry out your wishes.

6)    Make sure to review how your assets are owned, and who are designated as the beneficiaries of trusts, IRAs, 401(k)s and life insurance policies as the new law may now favor certain changes in ownership and beneficiaries.

This list is not all inclusive, and your particular circumstances may raise issues unique to you.


Many law firms, including Unruh, Turner, Burke and Frees offer complimentary appointments or telephone conferecens and document review for their clients and in some cases, for new or prospective clients.  Take advantage of this type of review to make sure that your estate planning still works.


For more information, an estate planning questionaire, or for an appoinment, please call 610-933-8069 and mention: Estate Planning Under The New Law for a complimentary appointment or document review.


David M. Frees III

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David M. Frees, III
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