2021 – Year End Estate Planning Review

2021 was a memorable year in many ways, and we saw a lot of new developments that may have had significant effects on your estate plan, including the Tax Cuts and Jobs Act (TCJA), the Coronavirus Aid, Relief and Economic Security Act (CARES ACT), the American Rescue Plan (ARP), the pending Build Back Better Plan (BBB Plan) and other changes proposed by the Biden administration.

The TCJA has probably had the most significant effects on overall tax planning due to all of the different areas it touched, including structural changes to individual and corporate income tax, international taxation, deductions for pass-through income, and the elimination of certain itemized deductions. Most importantly for estate planning purposes, the TCJA doubled the estate, gift and generation-skipping transfer (GST) tax exemptions. As of now, many of the changes imposed under the TCJA are scheduled to sunset after December 31, 2025, with the exemptions currently scheduled to revert back to pre-TCJA levels. Given the uncertain political landscape, we continue to view this temporary increase in exemption amounts as an unprecedented opportunity for structural estate planning, tax mitigation and asset protection

As we reflect on 2021 and look forward to 2022, the only thing we can be certain of is that there is no better time than now to protect your assets and family with a comprehensive and integrated estate plan. As Benjamin Franklin is credited in saying, “if you fail to plan, you are planning to fail.” All too often, people fail to take the time to create a will or a trust indicating how they would like their assets handled after they pass away. Such a failure to plan results in a significant amount of their assets paid to courts, lawyers, and other costs as family members fight over the assets in probate court, all of which can be avoided with proper planning. Just a few days ago the Wall Street Journal ran a story titled Zappos Founder Tony Hsieh’s Friends, Family Feud Over His $500 Million Estate. Mr. Hsieh died without a will or a trust and, as a result, the WSJ reported that “[i]t could take several years for Mr. Hsieh’s estate to be settled” while his friends and family fight each other over what they claim to be their share of his estate.

Even if you already have a plan, now is a good time to review it with Johnson Fistel’s seasoned tax and financial professionals to make sure you are taking advantage of all of the recent changes and opportunities. While the permanency of the TCJA and estate tax exemptions remains uncertain, the current environment is optimal for protecting the things you care about the most.Edit

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