One of the most important things El Paso County residents can do is create an estate plan. Regardless of age, an estate plan is the only way to ensure that an individual’s wishes are carried out after his or her death. Creating the estate plan, however, is only the first step, as estate planning should be a continual process. Things change, how people want their estates dealt with change and the benefits of one estate planning vehicle may change over time, too.
Take, for example, trusts. There are numerous tax advantages associated with trusts, but some of those advantages may no longer be as important as they once were. One of the biggest benefits to a trust is that it avoids federal estate taxes, but since the individual exemption for estate taxes is now $5.25 million and $10.5 million for couples, estate taxes really only apply to very wealthy people. Perhaps it would be worthwhile to talk with an estate planning lawyer and end a trust and explore other vehicles.
It is an estate planning attorney’s job to track changes in federal and state laws that affect existing estate plans. If a plan no longer works or is no longer the best option for an individual, he or she will want to modify his or her estate plan with an attorney’s help.
Instead of relying on trusts to avoid estate taxes, many people are using intrafamily loans to avoid high income taxes. This certainly doesn’t make sense for everyone, but it is an important option that many people in El Paso County will want to take into consideration.
Source:Wall Street Journal, “Estate Plans Shift Focus to Income Tax,” Arden Dale, Sept. 6, 2013