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Dear Appreciated Client,
We wish you a very Happy and Healthy New Year. With the New Year
upon us, we once again see changes in the laws which will affect
your Estate Plan. As usual this is a good time to reflect upon whether
to update your Estate Plan. With personal changes in health and
wealth and the phasing in of recent legislation comes the need to
determine whether your estate plan as it exists will ultimately
meet your current personal goals and objectives . Here are a few
substantive developments worth reviewing:
Recent Changes
- Increase in Death Tax Applicable Exclusion. Your
Personal Applicable Exclusion formerly know as your United Credit
as been increased to $1,500,00. A husband and wife who die within
the next two years and who have an A/B Trust can now pass at their
deaths $3,000,000. This amount will in effect until 2006, at which
time it will increase to $2,000,000. Your exclusion will continue
to increase over the years until 2010 when the Federal Estate
tax is prepared for only one year. Under current law, in 2011,
your applicable Exclusion will be reduced to $1,000,000 per person.
Decrease
- Decrease in Death Tax Rate. The top death tax
rate reduces to 48% and will continue to be reduced over the next
few years.
- Increase in Personal Gift Tax Exclusion:
Formerly the $10,000 gift tax exclusion, last year the amount
you can give to a person without any gift tax consequences increased
to $11,000. For a Husband and Wife, this amount can be $22,000.
Even though your applicable exclusion rate has increased, the
amount you can give during your lifetime remains $1,000.000. If
you give more than your lifetime exclusion, you will need to pay
gift taxes.
- Increase in Generation Skipping Exclusion. For
those clients who have planned for their grandchildren, the amount
you can pass to a skipped generation will increase to $1,500,000
this year.
- Revised Advance Health Care Directives. Due to
the revised federal HIPPA rules and regulations regarding privacy
issues with your doctors, hospitals and other medical advisors,
we have updated our Advanced Health Care Directives.
Recommendations
- REVIEW ESTATE PLAN FOR SIMPLIFICATION.
Possible simplification of your estate plan may be needed. As
beneficiaries grow older and as tax changes, estate plans may
actually get simpler. As our lives and goals change, review of
your Estate Plan is critical to keep current. Clients, who had
a properly drafted 'A/B' Trust, may wish to amend their Trust
and simplify the Terms and avoid unnecessary additional Trust
Administration costs. Often clients can do this and still carry
out their objectives.
- REVIEW OF INSURANCE, IRA's and OTHER DEFERRED
COMPENSATION. Now more than ever is the time to review insurance,
IRA's beneficiaries' and other deferred compensation designations.
Further the review of ownership and beneficial designations of
Life Insurance policies, Annuities, IRA's and other differed compensation
is important to be certain they coordinate with other aspects
of your estate plan. A properly stretched IRA can save income
taxes for your beneficiaries if properly set up.
- REVIEW OF TRUST ASSETS TITLE. It is wise
to periodically review the types of assets owned, as well as the
titling on those assets. The method in which the title to assets
is held will greatly impact your overall estate plan, cost of
administering an estate, tax ramifications, and most importantly,
the eventual distribution of assets to those intended. If you
have refinanced your home, please review your deeds. Many mortgage
companies require you to take home out of your Living Trust. We
see many incidents where they do not put it back into your Trust.
We are pleased we have been part
of your personal resolution to put into place and maintain a Living
Trust or Last Will and Testament. Your Estate Plan is only current
if it meets your current goals and objectives. Your personal review
of your Estate Plan is wise, and a periodic review of your Estate
Plan by this office is essential every 3 to 4 years, if not sooner.
If you feel it would be beneficial for an Estate Planning Review,
please call our office at (760) 438-5599. We will then schedule
an appointment and forward directions to our office along with our
Client Updated Questionnaire.
In addition to Estate Planning, we continue to advise families on
issues pertaining to Trust Administration, Probate, Real Property,
Medi-Cal and Elder Law, Charitable. Gifting, Family Limited Partnerships
and Asset Protection. We greatly appreciated your new client referrals
of your friends and family. We continue to succeed with your praises.
We look forward to being of service to you.
Yours truly,
Arthur S. Brown, APLC
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