December 20, 2018
Your estate plan shouldn’t be a static document. It needs to change as your life changes. Year end is the perfect time to check whether any life events have taken place in the past 12 months or so that affect your estate plan.
And the plan should be reviewed periodically anyway to ensure that it still meets your main objectives and is up to date.
When revisions might be needed
What life events might require you to update or modify estate planning documents? The following list isn’t all-inclusive by any means, but it can give you a good idea of when revisions may be needed:
It’s also important to review your estate plan when there’ve been changes in federal or state income tax or estate tax laws, such as under the Tax Cuts and Jobs Act, which was signed into law last December.
Will and powers of attorney
As part of your estate plan review, closely examine your will, powers of attorney and health care directives.
If you have minor children, your will should designate a guardian to care for them should you die prematurely, as well as make certain other provisions, such as creating trusts to benefit your children until they reach the age of majority, or perhaps even longer.
Your durable power of attorney authorizes someone to handle your financial affairs if you’re disabled or otherwise unable to act. Likewise, a medical durable power of attorney authorizes someone to handle your medical decision making if you’re disabled or unable to act. The powers of attorney expire upon your death.
Typically, these powers of attorney are coordinated with a living will and other health care directives. A living will spells out your wishes concerning life-sustaining measures in the event of a terminal illness. It says what means should be used, withheld or withdrawn.
Changes in your family or your personal circumstances might cause you to want to change beneficiaries, guardians or power of attorney agents you’ve previously named.
Revise as needed
The end of the year is a natural time to reflect on the past year and to review and revise your estate plan — especially if you’ve experienced major life changes. We can help determine if any revisions are needed.
It’s been said that timing is everything. With the reduction of individual income tax rates under the Tax Cuts and Jobs Act, now may be the right time to convert a traditional IRA to a Roth IRA.
The Section 179 deduction has long provided a tax windfall to businesses, enabling them to claim immediate deductions for qualified assets, instead of depreciating them over time. For 2019, the maximum deduction is $1.02 million, subject to a phaseout rule if more than $2.55 million of eligible property is placed in service during the tax year. Even better, the Sec. 179 deduction isn’t the only avenue for immediate tax write-offs for assets such as machinery and equipment. Under the 100% bonus depreciation tax break, the entire cost of eligible assets placed in service in 2019 can be written off this year. Contact us to learn how your business can maximize the deductions.
Business owners have been engaging in bartering transactions for hundreds of years. But if your company trades goods or services today, be aware there are tax consequences.