Page 13 - Means Wealth 2020/2021 Perspectives

typically considers any property acquired during a marriage to be the
property of both spouses. Some states also impose a form of estate
or inheritance tax. Each state has different exemption amounts. It is a
good idea to know where your state stands on these issues. You may
need to update your estate plan if you change residency.
6. Through the Tax Cuts and Jobs Act passed in 2017, one thing that was
preserved is estate tax portability. The unused portion of the marital
exclusion amount (currently at $11.58 million Federally in 2020 and
moving to $11.7 million Federally in 2021) may now be transferred to
the surviving spouse provided that a federal estate tax return is filed to
preserve the deceased spouse’s unused applicable exclusion amount
within 9 months, or 15 months if an extension is granted. Essentially,
this gives you double the amount ($23.16 million for 2020 and $23.4
million for 2021) free from Federal estate taxes—upon the death of one
spouse—if used properly.
7. Continue to be philanthropic. Never forget that philanthropy is a
positive for society, the charity you support and for the donors’ family.
Remember to include the charities that you are passionate about in
your estate plan. You can consider direct gifts, charitable trusts, donor
advised funds and family foundations.
8. Remember that income tax rates have increased relative to estate
tax rates. Changes in the federal tax law make it increasingly
important to focus on the income tax consequences of estate
planning in addition to the estate tax consequences. It is worth
noting that trusts are taxed at the highest federal income tax bracket
(37%) if there is $12,950 of income.
9. Make sure existing life insurance policies make sense from an estate
planning and financial perspective. Proceeds pass directly to a
beneficiary unless your estate is the beneficiary.
10. Keep your loved ones informed. Consider drafting and regularly
updating a letter of instruction to your fiduciaries and children. The
letter should include an inventory of assets and the location of each
asset, such as in the safety deposit box, as well as a list containing
names, addresses and phone numbers of your estate planning team.
Make sure to give your fiduciaries the appropriate power to handle
your assets. Make sure your power of attorney and will give your
fiduciaries the access they need to access these accounts. n

Adapted from Fidelity’s “10 estate plan pitfalls to avoid”

13