Will 2016 bring any changes in estate planning laws?

On behalf of Scaringi Law posted in Estate Planning on Monday, December 14, 2015.

Will estate planning rules change in 2016? A recent article highlighted a few developments.

First, the federal estate tax exclusion will increase to $5.45 million in 2016. The $20,000 increase from last year (2015) is intended to reflect inflation. Yet policies are also at play, as the exclusion amount ten years ago (in 2005) was a mere $1.5 million. The gift tax exclusion will remain the same in 2016, set at $14,000 annually. Items excluded from gift taxes will also remain the same, such as gifts for education or medical care. However, an individual making those gifts should take care to transfer funds directly to the schools or medical facilities.

The highest estate tax bracket in 2016 will be unchanged, set at 40 percent. The new portability rules of utilizing a spouse’s unused exclusion amount will also continue. In effect, a couple can transfer over $10 million to heirs without triggering estate tax under the portability rule.

Of course, state gift and estate taxes may not mirror their federal counterparts. An individual writing a will or trust in Pennsylvania would do well to consult with an attorney to understand the state’s lower exclusion levels and other potential tax liabilities.

Our law firm focuses on estate planning and can help clients utilize a plan that will address their unique circumstances. We have experience drafting a variety of documents, including wills, revocable and irrevocable trusts, stand-alone trusts, conservatorships, powers of attorney, and living wills. Although there are many options available, it is often in an individual’s best interest to combine legal, financial and insurance instruments to fully carry out their plans for transferring assets.

Source: The Motley Fool, “Estate Planning in 2016: Here's What You Need to Know,” Dan Caplinger, Dec. 11 2015