How Will Estate Plans Change in 2020?
With 2020 in full swing, most of us have recovered from the holiday season and are back into our daily routines. However, it is important to take time to consider how the change from 2019 to 2020 might impact certain aspects of your life. One aspect you might not regularly consider is how your estate plan will - or should - change in the new year.
While your estate plan might generally be on the backburner, and you trust that it will protect your beneficiaries and property, it is important to have an experienced attorney regularly reviewing your estate plan in light of changing circumstances and changing laws. The following are some ways that estate plans might need to change in 2020.
The estate tax and gift tax exemptions increased again in 2020 to the following:
- $11.58 million for an individual
- $23.16 million for a married couple
Since the Tax Cuts and Jobs Act of 2017 went into effect and doubled the federal estate tax exemption, most people assumed they do not have to worry about estate taxes, as their estates are worth less than the exemption. However, with the turnover into the 2020’s, the expiration date for the increased exemption looms in our future.
The exemptions are set to revert back to half the current amount as of 2026, and it is entirely possible that a new law will be passed before then to lower the exemptions. It is important to take advantage of gift tax exemptions now to reduce your estate in the event the exemptions decrease significantly in the near future. Many tax planning strategies take a few years to implement, so it is important to address this matter and plan ahead now.
Congress also passed the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) that took effect at the start of 2020. This Act addresses payouts from retirement plans after the plan owner passes away. Specifically, the Act requires that many plans be completely paid out within ten years of the owner’s death. This negates much of the control that you would otherwise have over the distributions made to your beneficiaries. Speeding up distributions could have income tax implications, as well.
In response, many people are converting to different types of retirement accounts or creating a trust to serve as the beneficiary of the retirement plan, or naming an existing trust as the beneficiary. This is a complex law with complex implications on retirement account-holders, so it is best to discuss whether you should adjust your estate plan with an experienced attorney in light of the new law.
Discuss Your Future with Our Sarasota Estate Planning Attorneys
The Sarasota estate planning lawyers at Inverso Law Group know that changing laws and circumstances can significantly impact an estate plan. We are ready to advise clients on how to create or adjust estate plans to best protect their property and beneficiaries. Call 941-926-6039 or contact us online to discuss your situation and your options today.