Estate planning can be a difficult process for many people to start thinking about. It involves planning for the inevitable day when your assets and property will have to be distributed according to your final wishes. Changes to state and federal estate laws also mean that individuals should regularly revisit their estate plan to ensure it complies with new regulations. As such, you may want to take the opportunity to visit with your estate planning attorneys to see how new 2017 laws will impact your estate plans.
Some changes to estate laws have already gone into effect, while other changes are yet to be determined. For example, last summer, Governor Jerry Brown signed a new law which makes significant changes to California's right to recover costs associated with Medi-Cal benefits (Senate Bill 833).
Effective January 1, 2017, the aforementioned new law limits estate recovery under Medi-Cal to those services required to be collected under federal law and limits the definition of “estate” to include only real and personal property and other required assets. When the estate is a homestead of modest value, the Department of Health Care Services is required to waive its claim. The law also prohibits recovery from the estate of a deceased Medi-Cal member who is survived by a spouse or registered domestic partner.
This change may make it more important for more Californians to look into estate planning, including creating a revocable living trust, in order to avoid probate. Avoiding probate is generally preferred as a way to reduce costs and speed up the transfer of property following death. Now, with SB 833 in effect, avoiding probate may be even more important for surviving family members.
Perhaps the most significant changes for estate planning in 2017 are yet to be seen. President-elect Trump has voiced his support of tax reform, which would also impact estate plans. Most significantly, Trump has proposed eliminating the gift tax and estate tax.
The current estate tax places a 40% tax on estates valued at more than $5.45 million dollars. This would have no effect on the majority of Americans with estates valued at significantly less than the threshold amount. However, high-valued estates could potentially see much more money going to their beneficiaries.
Even without elimination of the estate tax, many individuals have established estate plans for the specific purpose of avoiding triggering the estate tax. If the estate tax is done away with, individuals with multi-million dollar estates may want to consider adjusting their estate plans. Similarly, if the gift tax is eliminated, individuals may want to distribute more of their assets during their lifetime.
Tax and estate laws change every year. It is important to talk to your estate planning attorney if you have any questions about making changes to your estate plan to ensure your assets will be distributed according to your wishes.
If you have any questions about estate planning laws or new tax regulations, the law firm of Butterfield Schechter LLP is here to help. We will answer all your questions and make sure your estate plan will provide for your loved ones and keep your best interests at heart.Contact our office today with any questions on how we can help you prepare for the future.