The following is an article from the April 2018 issue of "Get Your Ducks in a Row" Carolina Family Estate Planning's free newsletter. You can read the rest of the issue, as well as back issues of our newsletter online or subscribe for free!

By now you have probably heard that the Tax Reform Act increased the estate tax exemption (the amount that you can leave to your beneficiaries free of estate tax) to $11.2 million. This change is temporary and will expire at the end of 2025. However, every time we see such changes to the estate tax laws, we receive a lot of inquiries from people about whether they still need a will or trust or whether they need to do estate planning at all? Our answer is always a resounding “YES!”

You see, for most families, estate planning hasn’t been about estate tax planning for a while now. For several years, the estate tax exemption has been at least $3.5 million or higher. So, what is modern estate planning about?

Incapacity Planning: As life expectancies have increased with medical advances, there is a much higher likelihood of facing a prolonged phase of incapacity during our lifetime. Caregiving after a stroke or a diagnosis of Alzheimer’s, dementia, Parkinson’s, or other degenerative illness can be financially devastating. Comprehensive Incapacity Planning should address who will handle your healthcare and financial affairs on your behalf and how you will pay for your care needs in the event of your future incapacity.

Income Tax Planning is the New Estate Tax Planning: As much as everyone likes to complain about taxes, we’ve had some of the lowest top marginal income tax rates in the history of the U.S for the past couple of decades. In years past, top marginal income tax rates have been as high as 50, 70, or 92%! With the growing national debt, many are speculating that income taxes will increase at some point in the future. We can help explore strategies to reduce income and capital gains taxes on appreciated stock, real estate, family farms and businesses, and similar.

Maximizing Retirement Accounts: As defined benefit plans such as pensions have all but disappeared and individuals have become responsible for their own retirement savings, planning to maximize retirement savings has become more important than ever. This can include exploring ways to reduce taxable income during retirement and the best way to pass such accounts down to beneficiaries to help them have a secure retirement.

Asset Protection: Asset Protection is a broad term that can encompass a variety of planning goals such as protecting assets from taxes, long-term care costs, lawsuits, creditors, divorce, and more. Asset protection planning may involve planning to protect yourself from such risks and/or protect your surviving spouse or beneficiaries from such risks.

Legacy Planning: Estate planning is not just something you do for yourself, but also for those that you love. No one wants their loved ones to remember them for the stress and headaches that they left behind. Comprehensive estate planning can eliminate such issues, while also helping you leave a true legacy for your family by providing them protection from future lawsuits, creditors, and divorce. Or perhaps your plans for your legacy include establishing education trusts for your grandchildren or supporting your favorite church or charity. Regardless of your goals, estate planning puts you in the driver’s seat to establish those priorities.

Do you have a modern estate plan? If not, or if you have concerns that your planning may be due for an update, please give us a call at (919) 694-4437 to discuss.


Jackie Bedard
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Attorney, Author, and Founder of Carolina Family Estate Planning
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