When was the last time you reviewed it?
Changes in your life, your business, and the world, are all good reasons to revisit your estate plan now.
Consider personal changes
If you’ve experienced any of the following, you may want to redo or at least review your estate plan:
- Married, widowed, or divorced
- Birth or adoption of a child or grandchild
- Move to a new state
- Receiving a windfall, such as an inheritance or proceeds from the sale of your business
- Planning for substantial charitable contributions
Even if there’s nothing new, it’s a good idea to review your estate plan if you haven’t updated it within the last 5 years or so.
Consider “new” assets
Your estate may now include technology-driven assets you never considered before. These include passwords, photos, and other online or “digital” assets. Some may have little or no value, but heirs may want possession of them nonetheless.
Other digital assets may have value, such as your accounts at iTunes and Facebook, digital currencies such as bitcoin, and rewards programs.
In making your estate plans, be sure to:
- Create an inventory of your digital assets.
- Decide who inherits what.
- Describe how to access your digital assets. Provide user name and passwords for each account.
- Authorize access to your digital assets. Make sure wills and trusts reflect your intentions to allow your executor, trustee, or someone else to gain access to and power over your digital assets. Also check out authorizations at specific sites, such as Facebook and Google, which have post-death policies. For example, on Facebook, if there is a death certificate and account information, you can ask that the existing account be memorialized or removed. Google lets you make plans for your account before death, or deal with an account after death.
There’s a great article about planning for digital assets from the Journal of Estate & Tax Planning.
Consider new proposed regulations
Minimizing or avoiding federal estate tax on your business just became more difficult. Proposed regulations issued at the end of August would eliminate the ability to apply valuation discounts to interests in small businesses.
Special valuation rules apply for intra-family transfers of interests in corporations and partnerships (including limited liability companies) subject to lapsing voting or liquidation rights and restrictions on liquidation. The special valuation rules apply for estate, gift, and generation-skipping transfers. They are highly technical from a tax perspective, but estate planners are well-versed in them.
Technically the regulations would not be effective in most cases until after they are finalized. This won’t happen for a while. A public hearing on the comments is scheduled for December 1, 2016. Who knows when the new valuation rules will be finalized? And many practitioners are asking that the proposed regulations be changed.
The future for estate taxes could very well change after the election. Hillary Clinton is advocating a reduction in the exemption amount and an increase in the top estate tax rate to 65%. Donald Trump supports eliminating the estate tax entirely. What the new Congress will do remains to be seen. Surely you’ll want to revisit your estate plan when there are changes in estate tax rules.