Throughout the year we have been monitoring and communicating about the various discussions regarding potential tax law changes. Although there have been a lot of proposals put forth, we have a little more clarity as the House Ways and Means Committee has forwarded a “bill” (not law) to be considered by the full house that gives us some indication as to what the final law may be. It is important to understand that this is not the law and is subject to change.
Last week we addressed how new proposed tax law may lower the federal gift and estate tax threshold and prohibit current gifting strategies to lower Massachusetts estate taxes, as well as the window right now to take advantage of those current strategies. If you did not get a chance to read that blog, go check it out here.
For years we have been telling our clients, if you have questions or anything changes, call us; however, we are finding we get the question somewhat frequently, “but specifically when should I call you?” Or we find out about a major life change several months or a year after the fact because clients or their family members did not realize that they could or should call us. We thought we would try to clear some of that up and give you some guidelines on when you might want to think about picking up the phone or shooting us an email. We’re here to be a resource for our clients, and we never want you to feel like you just have to figure it out on your own. Here are some reasons you might want to reach out:
Families tend to be at the center of holidays.
The holiday season is a great time to gather to celebrate and carry on our family traditions. This year, some of our traditions needed to be modified or changed, but I find that most families have adapted and found ways to stay connected. In estate planning, we’ve found that communicating with our families about their estate plan is necessary to ensure their estate plans will actually work, and that their family is taken care of. That’s why we’ve included a family care meeting in our estate planning process, whereby you, your trusted advisers, and your family members meet to discuss your estate plan and how best to take care of you and your family in the event of incapacity and death. Remember, we do not have to disclose the value of assets in these meetings (because we don’t know the value of the assets when you die), but it is important that your family meets your trusted advisors, understands what your intent is regarding your estate plan, and knows that you’ve taken the steps necessary to make things easier for them when you die.
Every 4 years, a change in our Presidential elections results in a flurry of literature, workshops, and newsletters regarding potential changes in income and estate tax laws. This year was no exception, as the significant increase in the federal deficit resulting from costs associated with COVID-19 has placed more pressure on tax increases, including potential tax increases in the estate planning realm. The federal exemption amount, which is $11.7 million as of January 1, 2021, will, under the current law, decrease to about $6.7 million in 2026. Many believe that this decrease in the coupon will occur earlier or may even go down below the $6.7M returning to the former $3.5M. All of this is speculation at this point, but we must be prepared to act quickly, as some of these tax law changes may act retroactively.
Every year, at the start of the year, many of us make New Year’s resolutions. We think about the things we want to be different in our lives, and we resolve that we’re going to change them. For some of us, this actually results in life changes every year. For most of us, we have the best of intentions, but life gets busy, or challenges come up, and by February our resolutions are a thing of the past. Personally, I’m resolving to make more time for creativity in 2021—dust off my keyboard, do some more crafts and artwork with my kids. You can ask me in a few weeks what we’ve created, and we’ll see how it goes. I’m pretty sure my 1st grader and preschooler are resolving to find a way to get me to bake more cookies in 2021.
What a year it has been!
We all know that it’s been a crazy year navigating a global pandemic and keeping our family safe, but it’s also been an extraordinary year when it comes to estate tax, estate planning and changes in the law.
By: Scott Maibor, CFE
This week, here at Family Estate Planning Law Group we are excited to have Scott Maibor, of Senior Benefits Boston, guest blogging for us. We know many of our families have questions about Medicare coverage, and we think Scott has some great experience and expertise to share with you.
After 12 years in the Insurance Industry Scott founded Senior Benefits Boston to help clients with their Medicare health insurance needs. He enjoys simplifying an overly complex system with the goal of maximizing coverage and reducing costs.
In 2017 Scott decided to focus exclusively on Medicare and on helping clients approaching eligibility age. He is a Certified Financial Educator and Medicare (AHiP) Certified for 2021. As an independent Advisor he works with multiple carriers to enable him to serve as a fiduciary for his clients.
We recently blogged about how the CARES Act waived required minimum distributions (RMDs) for 2020 and even allows for an IRA owner or a beneficiary under an inherited IRA who had taken an RMD from their IRA to put it back. But here’s the catch: it has to be returned before August 31, 2020, which is approaching very quickly.
We highly recommend checking out the full blog here, but here are the highlights:
- The CARES Act waived RMDs for 2020 for both IRA owners and beneficiaries under inherited IRAs.
- For inherited IRAs: This only applies to beneficiaries of inherited IRAs from people who died prior to January 1, 2020. For those inheriting money under the new SECURE Act, you still have to liquidate the IRA within 10 years.
- If you already took an RMD for 2020 and do not actually need or want to use the money, you can put it back (but only the RMD amount, not any additional distributions you may have taken).
- You only have until August 31, 2020, to return the money, or you will have to keep it, so if you want to return any RMDs, please contact your accountant and/or financial advisor right away to figure out the best way to return this money.
As always, our team here at Family Estate Planning Law Group would love to help you think holistically about estate planning, from how to set up a plan to make sure your assets are aligned and your whole team of financial professionals and/or caregivers or loved ones are involved. To learn more about how we can help you take care of your loved ones, visit our website, check out our blog, or schedule your complimentary consultation today!
In this infographic, learn how Family Estate Planning Law Group will work with your family to create plan that not only addresses your goals and concerns, now, but one that will take care of your family when it matters most. Click the image to view the full infographic: