Even if you’ve already abandoned your New Years’ resolution, you should still do your best this year to focus on your loved ones and what’s best for your future. One of the best things that any of us can do during times of uneasy political or economic times is to focus on what’s important. Your planning for what lies ahead should understandably address critical issues like what happens if you become incapacitated or unexpectedly pass away. This article reviews some of the basic frameworks that you should start (or revise) your estate plans in 2022.
Critical Questions to Ask About the Status of Your Estate Plans
Some of the important issues that you should ask about the status of your estate as you decide the strength of your estate plan include:
- Whether your existing estate plan maximizes efficiency and minimizes the effort for survivors?
- How new regulations Congress is likely to propose would impact your plan?
- Do your living will and power of attorney documents accurately reflect your wishes?
- Have any minor or adult children created the necessary estate planning documents that would let you become involved with their affairs if they become incapacitated or passed away?
- Does your asset structure limit your potential liability?
The Forefront of Tax Laws
In 2018, the Trump administration substantially altered several aspects of federal gift and estate taxes. While thresholds for these taxes are currently high, remember that they are poised to dramatically lower again on January 1, 2026. This lowering of the thresholds could occur even earlier if Congress decides to pass a measure changing these limits.
While doing everything possible to minimize taxes is critical, it’s just as important to anticipate non-tax issues and matters. A fully fleshed-out estate plan is critical to the successful operations of most American families. Adequate estate planning does many powerful things including
- Make sure that the time leading up to a person’s death or incapacity is as low stress as possible
- Your estate should be settled in an efficient and prompt manner
- Your beneficiaries, in addition to your assets, are guarded against unforeseen and unpleasant events
Estate Planning Strategies You Might Consider Using
Some of the types of estate planning strategies that you might consider utilizing in 2022 include:
- Annual gifting is one way to pass assets to beneficiaries while reducing an estate’s overall value. In 2021, a person can gift up to $15,000 per individual without being subject to taxes.
- Intra-family loans are agreements made between family members to pass on assets with benefits that might not be available at financial institutes.
- Family limited partnerships are entitled established by family members to operate a commercial effort or retain assets.
- Revocable living trusts are powerful tools for people who want to avoid probate and provide protection from creditors.