Planning for the Inevitable…and also the Unexpected: Effective Estate and Tax Planning in Changing Times

Planning for the Inevitable…and also the Unexpected: Effective Estate and Tax

Planning in Changing Times

JUDITH A. HARRIS, ESQUIRE, LL.M (TAXATION) EQUITY MEMBER, CHAIR OF ESTATE TRUST AND TAX GROUP, NORRIS MCLAUGHLIN, P.A.

Basic principles of responsible estate and tax planning deserve your careful attention. Optimal planning for the desired distribution of your assets to your beneficiaries and the administration of your taxes, debts, and expenses after your death should include a Will--or a Will in conjunction with a Revocable Trust-- and the appropriate attention to the titling of assets and designation of beneficiaries. In addition, advances in medical science and the reality of longer life spans in the U.S.—and the increased possibility of some period of incapacity during one’s life—highlight your need for a state-ofthe-art Financial Power of Attorney and a Medical Power of Attorney and Advance Directive.

But that important wisdom is old news.

Many changes affecting our work and lives have occurred during the past 3 years. Changes brought on by Covid. By Congress' SECURE Act of 2020 and it's crucial, still-pending Proposed Treasury Regulations. By modified practices of certain banks and other financial institutions. By a scheduled, upcoming increase in Estate and Gift tax liability. These are only a few.

What should you do to make your Estate Plan and your documents most effective, given these changes? Here are 6 actions you should take immediately:

1. Accept the possibility of your incapacity and plan for

it. Planning for the distribution of your assets upon your death are critical. But too little attention is often given to planning for your incapacity. You should give careful thought to what plan should take effect—and who should manage that plan—in the event of your incapacity. A sophisticated Financial and Medical Power of Attorney/

Advance Directive (Living Will) with carefully chosen

Agents, Surrogates, and alternates are necessary.

2. Maintain an updated list of your assets and liabilities.

Planning for your estate depends on the kinds of assets and liabilities you (and, if you are married, you and/or your spouse) own, their values, and how those assets and liabilities are structured. Careful income tax and death tax planning depend on this complete and current information, as well.

3. Build strategic provisions in your Power of Attorney,

Will, and any Revocable and Irrevocable Trusts. None of us can predict the future. Because you cannot amend or modify any of these documents after you become incapacitated or after you die, it is not unusual for a document to become outdated, over time, as to your wishes, applicable Federal and state laws, or the powers