What’s New in Estate Planning?
By: Joseph T. Buxton III, CELA*, Founder, TrustBuilders Law Group Urbanna VA
Much has happened over the last few years in the field of estate planning. Most important was the recent decision by Congress on the last day of 2012 to extend the current estate tax exemption of $5M, which permits individuals to die owning assets of $5M or less without paying any Federal death tax. It also allows people to make a gift up to $5M without paying any current gift tax. Any gifts made (over the annual exclusion of $14,000 per year per gift) are deducted from your lifetime estate tax exemption.
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In addition, the concept of portability was extended, which means that if your spouse dies with an estate smaller than $5M and an estate tax return is filed for that spouse, the surviving spouse, under most circumstances, is able to claim the unused tax exemption. This means that for an individual who passes with a $3M estate and the spouse has a $6M estate, the $6M estate could claim the unused credit from the deceased spouse and pay no death taxes. Of course, in the present political environment, there is no guarantee that this level of exemption will continue indefinitely.
Virginia has also made some major changes in its estate planning laws beginning in 2003. Virginia relaxed the rules against perpetual trust, now permitting you to write a trust that can last for many generations. For example, you could set up a trust for your children and unborn –grandchildren.
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More recently in 2010, Virginia enacted Uniform Power of Attorney Act, which standardizes basic provisions for use in Powers of Attorneys and eliminates for banks and other for rejecting a power of attorney. In fact, if a financial institution fails to honor your power of attorney drafted under the new statute, there may be consequences for that rejection
Finally Virginia has also modified the law respecting medical directives. Your living will and medical power of attorney now can provide authority for your spouse or other agent(s) to make medical decisions for you, if you have been determined to be suffering with Alzheimer’s or other forms of mental illness. Those decisions can be made over your protest under most circumstances. The only restriction is that should you be admitted to a hospital, you can only be kept in the hospital up to 10 days over your protest. If at the end of 10 days, you want to go home, you would go home. If any of your documents have not been updated to reflect these changes, it is time to sit down with your estate planner to make sure that you have incorporated all the benefits of these new statues.
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* Certified Elder Law Attorney by the National Elder Law Foundation