In Virginia, a simple will is the most basic estate planning document and can be a good choice for those who have no children under the age of 18, and have uncomplicated estates.
What Congress gives in the recent changes to estate law, Congress can take away. Remember that the new law is in effect for only two years. So, if you are looking for a way to protect your estate no matter the future changes in the law, it is a good idea to talk to an experienced estate planning law firm.
Important changes in the new estate laws
The new estate tax law passed for 2011 is actually an extension of the so-called “Bush tax cuts” except that the new law includes a provision allowing married people pool their estate tax exemptions – a feature widely known as “portability”.
What this means is that a surviving spouse can keep his or her own $5 million estate tax exemption and add any portion of the exemption that was not used by the deceased spouse. This is a new provision.
The question becomes what does this change really mean to previous estate planning and should people and families change their estate plans because of this additional portability.
The short answer is no.
Here is an example of how portability works:
A spouse dies with an estate valued at $8 million. He or she has made $2 million in lifetime gifts. Now, the surviving spouse can use $3 million in unused estate tax exclusion and add their own $5 million for a total $8 million exemption.
The problem is that the rules are only in effect for two years. And unless you are expecting to pass away before then, no one should change their plans for some potentially temporary reason.
The other problem is that mere portability does not address the totality of estate planning. Setting up a trust, on the other hand, can clear the issues revolving around the total exemption amounts for both spouses, including items like appreciation and credit protection.
Professional estate planners and attorneys will advise that relying on portability as a definitive benefit to the estate is not well advised since it can change at any time by Congress.
Find out more about why estate planning, estate tax and probate are still important in Virginia, after the most recent law changes by contacting Northern Virginia Trusts and Estates today.