The Tax Cut and Jobs Act of 2017 made some major changes to the Internal Revenue Code. Since it significantly increased the exemption amounts for the estate and gift taxes, it made the need to engage in estate planning for tax purposes a less pressing issue for the majority of people. However, there are still many reasons why Arizona residents may consider drafting these important plans.
Based on the number of filings regarding the exemption for estate and gift taxes in 2013 and the fact that the exemption amounts have doubled, it is estimated that less than 0.1% of adult deaths in 2018 will include taxable estate filings. As such, estate planning for the average person will not have to focus on shielding heirs from these type of taxes. It is estimated that the average person revisits an existing plan about every 20 years, which means that many documents are likely outdated and may need to be revised.
There are several reasons why one may need to either update or draft plans. Some of the reasons are to ensure that minor children will have appropriate guardians and that their assets will be protected in the event of both parents' deaths. These plans can dictate how heirs will be provided for and how charitable donations will be distributed. They can also structure asset distribution through the use of trusts to avoid probate address asset management for special needs heirs or those who are not financially savvy.
Estate planning can also be used to either establish or revise power of attorney or health care proxies. Reviewing these plans also allows for updates to beneficiaries, if appropriate. As for tax planning, there may be a need to establish separate trusts to take full advantage of any tax exemptions at the time of death for a surviving spouse and later heirs. Arizona residents who are uncertain as to the tools that will best meet their needs may benefit from the advice of an experienced attorney.