A last will and testament is, without question, a powerful document.
Besides giving you the ability to distribute your estate, choose your heirs and appoint guardianship, a last will and testament also lets you give your most precious belongings to your favorite people. But a will is not an estate plan, though it may be part of your estate plan.
I draw your attention to this because back at the end of 2017 the new tax law changed the estate tax exemptions. The new law made it even more important for taxpayers to understand the difference between a will and a true estate plan. Under the new tax laws, very often a will simply won’t be adequate. Not understanding the differences could deliver a devastating blow to your beneficiaries.
Understanding New Tax Laws Regarding a Last Will and Testament
The big deal about the new tax law that could potentially cause trouble is that estate tax exemptions have been doubled to roughly $11.2 million per person. So, for a couple, the exemption will be $22.4 million until 2026 when it reverts back to the current $5 million per person. But the fact of the matter is that estate planning has never been just about taxes.
Here’s what could cause trouble. Some people may believe that they can get away with a short simple will since they will consider the estate tax to be irrelevant. However, simple wills do not include flexible trusts to protect surviving spouses and children from creditors and predators. Wills also do not include protections for later life and aging that a robust revocable trust does. You must know that real planning and is needed.
This is a good time to review your will and seek the help of an estate planning attorney to make sure you are protecting your assets for your later life and your beneficiaries.