The tax law passed by Congress in December might be a good opportunity for Nevada residents to review their estate plans. The increase in the estate tax exemption may affect couples whose estates are worth up to $11.2 million. They might have designed their plan with estate tax in mind, but since the exemption has been raised, some of the measures they took no longer may be necessary.
Married people should make sure that the portability clause is invoked correctly. This allows a spouse to avoid estate tax on an inheritance from the other spouse. People should also review their documents and make sure they are prepared correctly and express a person’s wishes. For example, a power of attorney that gives broad powers to someone in case the person is incapacitated could allow actions to be taken such as stopping financial support for a disabled loved one, mismanaging the estate, changing beneficiaries on 401(k)s and other accounts, and giving gifts to people.
People should also review the estate plan to make sure it still reflects the current situation. Divorces, marriages, deaths, selling a business, receiving an inheritance and other life events may result in the need to revise estate planning documents. The plan should then be reviewed every few years in case of further changes.
One type of change a person might want to make is using a trust in the estate plan. While some people may think of trusts as only useful for large and complex estates, they can also be used to specify that distributions should be given out at a trustee’s discretion or based on certain milestones, to take care of loved ones with special needs, to avoid probate, to protect assets from creditors and for a number of other reasons.