Most often when talking to friends, colleagues, or new acquaintances, I am asked what I do, and when I tell them that I create Wills and Trusts, I generally get one of two responses: 1) I need to do that, or 2) I’ve already done that. The first one is easy to fix, I tell them to come on in for a free conversation and get that item off their to-do list. The second one is more troubling. Many people believe that estate planning is a “one and done” deal; meaning that once they have created their Will or Trust they never have to touch it again, i.e., they think they have a healthy plan. However, law, like technology, is constantly changing. Many people wouldn’t dream of using the original iPhone (it’s so outdated!) but the Estate Plan they created in 2007 may need to be updated. Let’s highlight some of the bigger changes over the last 10 years.
On a personal note, your own life has likely changed drastically. Whether you were single and now you’re married, or maybe you were married and now you’re divorced, or perhaps you did not have children and now you do, or those children you do have are grown up and moved out. Whatever your circumstances, life does not stay still and making a plan that fits your family and your life is important. If your children are young, you need to appoint guardians. If your children are grown, those guardian provisions in your old Will or Trust aren’t needed anymore. Perhaps the trust you set up for younger children is no longer relevant for the 30-year-old that now has their own children.
The law itself has changed! You have more control than ever on how you want to be cared for during incapacity. The old “Living Will” is out, and Advanced Health Care Directives are in. The latest health care documents have stronger provisions for end of life care, as well as more options for care during incapacity. Read our “Living Will No More” blog from June for more details. As of 2017, Georgia created an entirely new bill and new financial power of attorney. The new financial document is more enforceable and durable than the old financial power and has new provisions as more finances are managed through digital resources. Read our “New Financial Power of Attorney” blog from early July for more details.
Even the laws about Wills and Trusts has changed. Just this year, 2018, a new Bill from the Georgia House ushered in a new era of modernized provisions that make Georgia law similar to surrounding states. The new bill provides for more rights and solutions for unborn and minor beneficiaries; created ways for irrevocable trusts to be changed; allows for greater ease for the management of trusts, and allows for trusts to continue for up to 360 years.
Perhaps the most interesting change for clients is the new estate and gift tax exemptions. Any estate under $11.2 million can pass tax-free to beneficiaries. A client may give up to $15,000.00 to each person they wish on a yearly basis, tax-free. With the tax exemptions being so high, many people who have old trusts can greatly simplify their documents and their plans. Most couples do not need Credit Shelter Trusts, Bypass Trusts, or other separate trusts after the passing of one spouse. In 2007 the estate tax exemption was a mere $2 million (easily reached with life insurance and real property); therefore, many clients needed special provisions that protected their assets from the 40% estate tax. Even as recently as 2010, the tax-exempt amount was $5 million, which still posed a problem for a large number of clients. Many people don’t realize how much their estate is worth until they sit down with us. When we calculate bank accounts, money market accounts, retirement accounts (401, IRA, 403(b), etc.), homes, life insurance, and stocks, reaching that mark is surprisingly easy.
At the current rate of $11.2 million, even those who have invested well over the years find mandatory credit shelter provisions unnecessary. While a credit shelter trust is not harmful in any way, it is another complication and process for your spouse and loved ones to go through that is best avoided if it is unnecessary. Simplifying your estate plan can be the best gift left for the people you love.
Even with all these changes, the law is always changing. We know to expect more changes in 2025, if not sooner! Keeping up with your estate plan assures not just that you have a legally valid document, but that your plan actually achieves what you want it to. Let us keep up with the changes in the law, and help you keep up with the changes in your life.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.