Changes in state tax laws is one of the reasons to update your Will. You may be aware that the State of New Jersey is repealing the state estate tax effective January 1, 2018 and in the interim raised the exemption from $675,000 to $2 million as of January 1, 2017. Your Will and Estate Plan is dynamic, meaning that the plan and will must be revisited from time to time. Your first Will satisfied your needs at the time but I guarantee you that life events have created situations not addressed in your original will plan making it outdated today. Here are 11 reasons why a will should be revisited.
• A beneficiary has died.
• A new birth.
• Divorce of a beneficiary
• Relocation to another state.
• A specifically bequeathed asset (e.g., a parcel of land) is no longer owned.
• A significant change in the value of your estate.
• Change in federal tax laws.
• Change in state tax laws.
• A beneficiary has become disabled, a spendthrift or has an addiction problem.
Changes in the federal estate tax made in 2012 made a great many wills obsolete. For example, the amount exempt from federal estate taxes was raised permanently to $5 million (plus inflation adjustments). Strategies such as the “two-trust” plan employed in an estate plan to reduce estate taxes were made completely unnecessary at the federal level for smaller estates. State laws must also be considered. As I mentioned in the opening paragraph prior to 2017 the NJ state estate tax exemption was $675,000. As of January 1, 2017, the NJ estate tax exemption was increased to $2 million. After 2017 the exemption is unlimited.
The most common technique for deferring estate taxes has long been establishing trusts in the will. For those married couples with estates of up to $ 10 million (plus inflation) for federal estate tax purposes the favorable outcome of the “two-trust” plan is now possible with the simplest of wills. Married couples living in New Jersey employed a trust plan in the will to take advantage of the estate tax exemption which after 2017 will not be necessary.
My suggestion is that you review your current Will every few years to be sure it is still meeting your objectives.