The Tax Cuts and Jobs Act of 2017 is one of the bigger changes to the tax process in the United States in recent memory. Not only were personal exemptions completely done away with for a larger standard deduction, but many other areas such as specific deductions, small business income, and education funding but the estate tax exemption doubled to over $22 million for married couples.
While the overwhelming majority of Americans and nearly every West Virginia family will not see any effect to their estate planning because of this increase, one thing remains the same: Now is either the time to begin your estate planning or, if you have created an estate plan in the past, time to update that estate plan.
For those of you who have not begun the estate planning process, you may wonder what is the difference between an estate plan and a will? After all, when everyone thinks about estate planning, I am sure that the will is what nearly every West Virginian considers to be the only document they need. In reality, that may be true for some families, but each person’s circumstances differ.
While anyone with property or other assets would benefit from drafting a will, there are many other tools in the estate planning toolbox that can compliment the individual’s will. Many people who have worked their entire lives will have assets such as a 401(k), a Roth IRA or life insurance policies that have a designated beneficiary or beneficiaries. Because there are designated beneficiaries, these items will not pass under a will but under the terms of those specific instruments. However, maybe the owner of these assets does not want their minor children or even adult children to have all of those funds at one time. This is one of the many scenarios where an individual may want to consider at least a simple trust to spell out their wishes for the circumstances in which their loved ones will inherit the fruits of their labor.
On the topic of trusts, one of the biggest myths in estate planning is that trusts are only for the wealthy. This could not be farther from the truth. While trusts are often used to manage significant assets, there are plenty of situations where a trust could be the best estate planning device for estates without large assets. One of these situations is a trust that directs how minor or incapacitated dependents will be cared for. A will only directs how property will be distributed, but if minor children or incapacitated dependents are involved, with no surviving spouse at the time of death, a trust can be used to direct who will care for the children.
With nearly half of all marriages in the U.S. ending in divorce, this can lead to the potential for sour familial relationships. This could have disastrous consequences for the well being of your children should you not leave behind a document that memorializes who you desire to have custody and care of your little ones. Besides directing who will care for your children, the trust can also establish what assets, if any exist, will be used by the new caretakers to support your children after your death. As mentioned above, IRAs and life insurance policies will not be included in your will. However, a trust is not bound by that same restriction. A trust can be executed that directs that the proceeds received by your children from your IRA or life insurance policy are to be held in trust for their benefit and allows the caretakers to access these funds for their benefit.
In estate planning, there are a plethora of different options an estate planning attorney can use to assist their clients. Whether a simple trust can effectively accomplish the client’s goals or if a complex trust is needed or perhaps something in between, individuals should seek the advice of an attorney and thoroughly explain what they want to accomplish with their estate plan.
Regardless of your situation, give Shaffer Law a call today at (304) 400-4044 for your free estate planning consultation.
At Shaffer Law, we aim to streamline the process and help you through this extremely sensitive and delicate family matter.
If you believe a loved one’s estate is being treated improperly, give Shaffer Law a call today.