2013 Is As Good Of A Time As Ever to Review or Create An Estate Plan

It’s one month into the new year and now is a great time to review your current estate plan or to finally get around to creating an estate plan. Why now you may ask? There have been significant changes to the law including the passage of the American Taxpayer Relief Act of 2012, which was passed on January 1, 2013 and Massachusetts’ adoption of the Massachusetts Uniform Probate Code, which was enacted in 2012.

Estate Planning Considerations

Every estate is subject to a federal tax, but estates under a certain total value are exempt from the federal estate tax. Had the American Taxpayer Relief Act not been enacted, the exemption was scheduled to drop to $1,000,000. However, because of the new Act the exemption is set to increase from its base level of $5,000,000 to automatically adjust for inflation each year. In 2011 the exemption was set at $5,000,000 and now in 2013, with the adjustment for inflation, it will be set at $5,250,000. In addition the gift tax exclusion increased from $13,000 to $14,000 per a recipient annually.

The bad news is even if your estate is under the federal exemption; it may still be over the Massachusetts tax exemption, which is only set at $1,000,000. If you are over the MA tax exemption, but under the federal exemption then you would still need to pay MA estate taxes, however, you would be exempt from the federal estate taxes.

Tax changes are not the only reason to review your estate plan; here are some other reasons you may want to review your plan:

Marriage and divorce can significantly affect an estate plan.

Even if it wasn’t you who got married or divorced, but instead one of your beneficiaries, it is still a good idea to review to make sure that there are no inconsistencies between your documents and your intentions.

Changes in your assets

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Did you sell or purchase a home? Buy or sell a vehicle? Start a retirement account? Changes to your assets should be reflected in your estate plan.

Aging, death, or incapacity

Aging, deat, or incapacity of any of your designated beneficiaries, trustees, executors/personal representatives, health care proxies or durable power of attorneys.

Expansion of your family

Including, but not limited to new children or grandchildren. If you have minor children (under the age of 18) adding a guardianship provision to your will is an important step to take.

The Massachusetts Uniform and Probate Code (MUPC)

This code significantly changed the laws in this state regarding trusts and probate. If you had your estate plan created prior to the enactment of the MUPC then we recommend having your attorney review your plan and changing anything that may not comply with the MUPC.

If you do not have an estate plan, now is a great time to create one and we at Levine and Piro in Maynard, Massachusetts would be happy to help you do so. Contact our office now for a free 30 minute consultation. Have a happy, healthy and safe year.