If you have not updated your Minnesota estate plan since the new Tax Cuts and Jobs Act went into effect on January 1 of this year, you may wish to do so. One of the TCJA’s major provisions is the doubling of the federal estate tax exemption which increased from $5.9 million to $11.2 million for an individual. For married couples, the federal estate tax exemption is now $22.4 million.
What this means is that unless you and your spouse are super rich, you likely can now pass your entire mutual estates to your heirs and beneficiaries without paying federal estate taxes thanks to the Act’s portability provisions. The catch, however, and the reason why your current estate plan may be obsolete, is that all your estate planning documents and those of your spouse must contain the required wording to qualify for portability.
Periodic estate plan review
Even without these estate tax considerations, it is in your best interests to review your estate plan every three or four years to make sure it still reflects your wishes. Remember, you set up your plan to benefit yourself, your family and possibly your favorite university or charity. People and institutions both change over time. Consequently, you should review your estate plan whenever any of the following occurs:
- You or an adult child marries, divorces or remarries
- Your spouse, a child, or the spouse of a child dies
- You or an adult child welcomes a new baby
- You retire
- You receive a significant inheritance
- You settle a significant lawsuit
In addition, you may need to review your estate plan if you or any of your heirs and beneficiaries becomes disabled, suffers a serious injury, develops a chronic illness or otherwise becomes incapacitated. You likewise need to review it if your university or favorite charity changes its name or merges with another organization.
Keeping your estate plan up to date ensures that your will, trusts, powers or attorney and all other documents continue to work in the ways you intend them to.