Yesterday at the Michigan Estate Planning Lawyer Blog I discussed two things to look for in your estate plan in this environment of a $3.5 million Federal Estate Tax Exemption and a down economy. You can read that post here: Michigan Estate Planning Lawyer Blog.Today we are going to cover three more items to consider in this estate planning legal environment
This down economy and economic crisis can increased the risk of bankruptcy, foreclosure, divorce, and law suits. On top of this, your beneficiaries irresponsibility in financial management may also reveal it self since times are tight. Now is a time to make sure that the spendthrift provisions in your revocable living trust (assuming you have a revocable living trust and want to protect your beneficiaries) are iron clad.
The next item to consider with the increase of the Federal Exemption is the need to rebalance trusts that try to minimize the effect of the Federal Estate Tax. Typically a husband and wife will have a separate trust. The goal being to stuff each trust up to the Federal Exemption amount, which this year is $3.5million. Last year the exemption amount was only $2million, so there may be a need to rebalance the trusts.
One bright spot of the economic crisis is the opportunity for gifting. Gifting is a way to reduce an estate value estate and gift tax free. This year $13,000 can be passed gift tax free. This is an increase of $1000 from last year. Couple this increase with the 50% loss of value for many peoples portfolio and we now have a great opportunity to gift.
These are turbulent times for everyone. You should sit down with your Michigan estate planning attorney to see how these changing times have effect your estate plan.
-Christopher J. Berry, Esq.
Oakland County Estate Planning Lawyer
