By Deborah Miller, JD
Senior Director of Planned Giving
West Virginia University Foundation Inc.
Many people neglect to review their wills periodically. That can be an expensive form of neglect. Tax laws change, and the tax bite on your estate changes too.
In the American Taxpayer Relief Act of 2012, Congress established a permanent base of $5 million as the tax-free amount for lifetime or estate giving. The amount will be indexed for inflation each year.
In 2015, property and assets in your estate worth $5,430,000 and less can be protected from federal estate taxes, but above that amount, 40% of the property will be needed to pay the taxes within 9 months of death. Special rules apply to married couples who receive, in effect, a total $10,860,000 in tax-free assets if both die in 2015.
Because of these recent significant changes, do yourself a big favor and review your will thoroughly now. Do all of the terms still provide the legacy you thought it would? Considering the possibility of changing tax laws in coming years, is the plan still appropriate?
If not, a codicil (or amendment) to the will may be appropriate. However, if the changes you decide upon are more than minor ones, a new will is the better option.
It is very important to spend some time re-evaluating your property’s value in today’s dollars and the potential for future growth during your lifetime. Your real estate has probably gone up in value more than you realize over the years. Other assets may have as well. In that case, a tax-saving bequest may be an appropriate choice.
Consider making additional or larger gift provisions to favorite charitable organizations in your revised estate plan. Such gifts, whether to a church, university, hospital or other helping organization, can provide a beneficial legacy for others while cutting estate taxes, if that is a concern.
Changes in tax laws, in intended beneficiaries, or in property or assets should prompt a periodic review of the legacy that your will provides.
That’s good planning.