A lot of people that do not have estate plans in place know that it is a responsibility that they should address, but they do not know how to begin in earnest. As a result, they continue to procrastinate, and their families are at risk.
With this in mind, we will share three relatively easy steps that you can take to put the estate planning process in motion.
Calculate the Value of Your Assets
The first step is to inventory all the assets that you expect to be able to pass along to your loved ones, and you can make projections about the future. You should take note of appreciable assets and come up with an estimate of the estate’s overall value.
On an obvious level, you have to know exactly what you will be transferring to the people on your inheritance list to prepare yourself for the next step. There is also the matter of potential taxation, and you have to evaluate any liability that you may have.
You can transfer a certain amount tax-free before the federal estate tax would be levied on the remainder. This tax carries a 40 percent top rate, so it can have a significant impact on your legacy if you are exposed.
At the end of 2017, the Tax Cuts and Jobs Act was enacted, and it established a record high exclusion for 2018. It went from $5.49 million to $11.18 million, and it is $11.7 million this year after a series of inflation adjustments.
When you are calculating your potential exposure, you should factor in a change that is coming in 2026. At that time, the provision in the aforementioned piece of legislation that set the record-high exclusion is going to expire or sunset.
On January 1, 2026, the exclusion will be reduced to the 2017 figure of $5.49 million. This trajectory has already been established, but there is another wildcard to take into consideration.
Senator Bernie Sanders of Vermont has introduced the contact form on this site you can use if you would prefer to send us a message.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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