Hyden, Miron & Foster, PLLC Law Blog

Monday, May 28, 2018

The Future of Estate Planning

Does estate planning still matter with the passage of the new tax bill?

Traditionally, much of estate planning revolved around avoidance of the so-called death tax. The death or estate tax applied to individuals or couples who died while deemed to be in possession of assets in excess of a tax-free limit. When applied, the death tax is a 40% tax against the value of an individual's estate in excess of the tax-free limit. However, with the passage of the Tax Cuts and Jobs Act of 2017, the death tax has become nearly obsolete. The new tax law now raises the estate tax exemption to $11.18 million per person and $22 million per married couple. With the death tax largely a moot consideration until 2025 when the estate tax exemption amount reverts to $5.5 million per person, some people may wonder why estate planning still matters.

Avoiding Probate

In Arkansas, as in other states, probate can be costly. Even with the estate tax gone, probate will result in court fees, attorney’s fees, and potentially lengthy delays. Your heirs may suffer as they wait for assets to be released through the probate process.

An estate plan can allow all or most of your assets to pass to your named heirs without the need for probate. Using a revocable trust, you can leave your assets to the trust’s beneficiaries automatically upon your death. A trust can save your family significant money and time.

Setting Out Your Last Wishes

A will remains of vital importance in setting out your last wishes. If you die without a will or trust in place, the court will be forced to distribute your assets according to state law. If you have a blended family, some individuals whom you love may not end up with a share of the assets that you intend for them to have. Further, you will be left without a say as to who will take over the critical task of raising your minor child. As such, no one, no matter their financial situation, should be without a basic Last Will and Testament.

Protecting Yourself in the Event of Incapacity

An estate plan is about far more than just death. Your estate plan should also include a financial and medical power of attorney to protect you and your assets if you become incapacitated. With a medical power of attorney, you can name a trusted love one to make medical decisions if you are unable. Similarly, a financial power of attorney allows the person you name to manage your financial affairs if you are incapacitated. For these reasons and many others, estate planning is still of vital importance and will remain so in the future.

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