It’s that time of year again: As the snow moves in, another year is on its way out. Although you may find yourself busy with holiday gatherings and the multitude of outdoor activities that Colorado has to offer each winter, it is also an important time to check in on your estate plan.
Here are some of the main areas of estate planning to review in 2021.
Tax Exclusions
Over the past several months, the U.S. Congress has been considering tax legislation that could drastically change the face of estate planning.
Versions of the Build Back Better bill have included provisions to trigger capital gains tax on a regular basis for assets held in trusts, upon death, and when making a gift. Congress also considered dramatically reducing the unified tax credit, which would have restricted the reach of grantor trusts as an estate-planning tool.
But the bill in its current form does not impact the estate tax system directly. Where does this leave Coloradans who have made changes to their estate plan in response to this legislation?
Members of the U.S. Congress recently proposed a striking $3.5 trillion spending plan that, if passed, would be funded largely through a significant tax overhaul. Here is what Colorado residents need to know about the tax increase proposal as it currently stands.
Reduction in the Unified Credit Amount
Effective in 2022, the current proposal halves the estate and gift tax exclusion. This change essentially reverses the Tax Cuts and Jobs Act’s recent change to the exclusion and will affect Coloradans with large estates.
As ever, your watchdogs, Bennett and Diedre Braverman were glued to the national scene when President Obama gave his State of the Union address in case anything of value fell out for us to tell you about.
This won’t be of interest to many of you, I’ll admit right up front. It’s a niche blog post. But I couldn’t ignore it because for those of you who own businesses or have children launching into the workforce, this could be great news!
If you don’t offer a traditional retirement plan, until now, you’ve been at a loss, without tools to help your lowest-wage earners with retirement.
F Forbes recently shared its list of 7 Major Errors in Estate Planning. I’d like to share them, one at a time, with comments, and then add a couple they missed. Rather than swamp you with a treatise, here’s one that I really feel passionate about.
There are so many easy ways to screw up your estate plan – which can damage family relationships for life in many cases – and so few ways to make sure it’s right. I’ll share how our clients get peace of mind that their plan’s going to provide what they need and bring their family closer, not the opposite.
When people think of technology, they think of a fast-paced, growing field. When they think of the law, they tend to think of stagnant printed volumes of laws stacked together in a library. The difference between the pace of technological development in space technology and estate planning technology is not as great as many imagine.
I visited the eye doctor today. My vision has changed a lot since I got my prescription lenses only 6 months ago. I think of optometry as a pretty unchanging area of medicine (“Is it better with one? Or two? One? Or two?”). I was surprised that they had two new tests for me today: to check the health of my areas of my eye deeper than my retina.
Your regular (annual to no-more-than-every-three-years) legal planning check up is similar to your annual eye exam. You and your attorney are searching for the changes that are particular to you (like the testing of your eye’s vision – your prescription). And you’re also looking for changes that apply to most or all patients: the new exam technologies.
First, let me share the fabulous news about “Retirement Accounts” then the bad news that I have to tell all the people who ask me about investment choices in a Retirement Account.
Retirement Accounts – 401(k)s, (403(b)s, IRAs and others – have wonderful tax advantages. Some allow you to put pre-tax money into an account, which then grows tax-free for years or evendecades until you withdraw it. When you withdraw it, you pay tax on the withdrawal. So they aren’t “tax-free”, they’re “tax-deferred.”
The Wall Street Journal’s Kelly Greene covered a Congressional proposal to end this attractive opportunity earlier this year.
Right now, if you inherit an IRA or other tax-advantaged retirement account, you are allowed to stretch out the withdrawals, and therefore the income tax, over the course of your own life expectancy.
Estate planning attorneys have found a way to wrap asset protection around that inherited IRA by putting it into a special tax-advantaged trust.
Boulder Estate Planning Legal Blog