Older individuals who already have an estate plan that they created in the early 2000s or mid-2000s might have complicated trust planning that was designed to minimize the estate tax. Now, with the estate tax exemption amount of $11 million and a new concept called portability, where we can stack each spouse’s exemption amount, that complicated estate tax planning is no longer necessary. Maybe we can make the trust more flexible for the surviving spouse and give them the ability to amend and revoke the entire trust, in order to deal with other situations as they arise down the road.
They can also be looking at an inheritance. That’s not a marital asset and not subject to an equitable division at divorce or at death. Maybe there are some family assets and they’ve decided they want them to bypass their spouse and go directly to their children. We would do a trust of that nature. Be on the lookout for changes to your estate, changes in relationships, and changes in the values.
What Updates Can I Make to My Estate Plan Regarding Creditor Issues?
For individuals who have decided not to have a trust but merely to have a will, if they own real property and if there are any debts at the time of their death, there are going to be some serious limitations on the ability of their heirs to sell that property shortly after their passing. Title companies in middle Tennessee won’t want to release the funds until at least a year has gone by or a formal probate administration has taken place. They need to reconsider whether a trust is ideal for them. The creditors really have no reason to negotiate with the executor because they are guaranteed to be paid, as long as there are assets in the estate. With a trust, we can give the family more leverage in dealing with creditors, get them to negotiate for a substantial discount on what is owed, and address the creditors of the heirs in trying to protect the assets from any claims those creditors might make on the estate.
What is Disability Planning? Do Most People Already Have Something Like That in Their Estate Plan?
Everyone has an estate plan, though they may not realize. It’s called the laws of intestacy or the Tennessee Probate Code, which deals with who has priority to step in and make financial and healthcare decisions when you are incapacitated, if you have not taken the steps to do pre-planning. Disability planning is really about having a plan in place to have people you know and trust step in and access your financial assets to make sure your needs and dependents are being taken care of.
It also includes giving individuals you know and trust the ability to receive your medical information, talk to your doctors, and make end of life decisions for you. Initially, you might name your parents but as your parents get older, you might name your children. As you have more and more opportunities to evaluate your children’s emotional stability and their decision making skills, you might want to update your advanced healthcare directive or financial power of attorney to change who is going to step in and act for you when it becomes necessary.
Can Changes Be Made to My Estate Plan at Any Time?
Under most circumstances, changes can be made to your estate plan. The only limitation is if there is an irrevocable trust, which has taken away the ability of the grantors to modify the trust. If it’s a living trust or a will, powers of attorney, or advanced healthcare directive, those can be changed on a regular basis.