Should I convert my Term Life Insurance to Permanent Life Insurance?

The decision as to whether or not to convert from a term policy to a permanent life insurance policy is very fact-specific and dependent upon the family circumstances.

There have been circumstances where term policies were taken for a temporary reason. It may have been because children were younger, or for a business purpose such as a buy/sell policy. However, as the term marches on, or sometimes comes close to expiration, the importance of those temporary reasons varies extremely. For example, if one has a child or spouse who is dependent on the insured and their earning capacity (such as a special needs situation or a nonworking spouse), there might be a need for financial security well after the term would have expired. In this situation, it does make sense to consider a conversion. However, many circumstances must be considered. In addition to the need, the financial means to pay for the insurance is a huge factor. Will the insured or the owner have the capacity to continue paying premiums on a permanent policy, which are generally higher than a term policy. What other insurances are available? What is the health situation of the insured-they qualify for a new policy today?

It is recommended that you do not wait until the end of the term or close to the end of the term to convert a policy if you have already recognized the need for permanent insurance. The insured health circumstance is unpredictable, as it might give rise to an increased premium, or even a lack of insurability, which is a high risk to take. However, if you choose not to convert your policies, you may elect to self-insure. This usually means allocating certain savings for potential future needs. The decision of whether or not to let a term policy expire should be made proactively. It is a factor in one’s financial plan just like any other financial consideration.

Feel free to contact us If you need help deciding whether or not you should convert a term life policy into a whole life, universal life, or other types of life insurance policy”

FANMAG: Because FAANGs Are So Yesterday

KEY TAKEAWAYS

  • FANMAG returns have been extreme relative to their contemporaries, but not their predecessors—their performance has been in line with the average top performers throughout US stock market history.
  • The FANMAGs were the big winners from a broader group of large tech companies, most of whom have lagged the market.
  • Following the popularity of the FAANG stocks, FANMAGs are the current fad. But history suggests fad-based investing is no substitute for broad diversification and a consistent approach.

A handful of large technology stocks have garnered attention for outsize returns in recent years. Collectively referred to by the FANMAG acronym, Facebook, Amazon, Netflix, Microsoft, Apple, and Google (now trading as Alphabet) all substantially outperformed the US market1 in the eight calendar years that they have all been public companies (Facebook went public in May 2012).2 Emerging as winners from among a large number of companies that fared less well during 2013–2020,3 these juggernauts bested most of their surviving peers with annualized outperformance versus the US market ranging from 7.31 (Alphabet) to 42.58 percentage points (Netflix), as shown in Exhibit 1.

While this performance dazzled investors and dominated headlines during 2013–2020, a more complete picture emerges when accounting for the many companies whose investors were less fortunate over the period. As shown in Exhibit 2, of the 10 largest US technology stocks as of January 2013, all but Apple, Microsoft, Alphabet, and Amazon underperformed the US market over the same period that elevated their tech peers to financial market stardom.

Exhibit 3 shows the hypothetical growth of wealth for an investor who put $1 in each of the 10 largest technology stocks and the US market in January 2013. While the $1 invested in Amazon and Apple, for example, would have grown to $12.63 and $7.18, respectively, by November 2020, the returns of their non-FANMAG tech contemporaries would have failed to even surpass the US market.

FANMAG returns certainly stand out among those of their contemporaries, but the range of individual stock outcomes has often been immense. A historical look shows that FANMAG performance has been quite ordinary in the context of past top-of-the-market performers. Drawing on stock return data since 1927, Exhibit 4 indicates that historical top performers often experienced larger outperformance relative to the US market than the FANMAG stocks realized during 2013–2020. For example, Apple’s 2013–2020
annualized excess return of 13.00 percentage points places it at the 93.67 return percentile among all US stocks that were trading in January 2013 and survived the eightyear period that followed. However, the average outperformance of stocks at the 93.67 percentile over eight-year rolling periods from 1927 to 2020 was 15.60 percentage points, or about 2.60 percentage points higher. With the exception of Netflix, the same holds for
the other FANMAG stocks, with historical outperformers at the same return percentile outperforming the market by more than the FANMAG stocks did in 2013–2020.

A defining trait of the FANMAG performance is that these outsize returns have come from among the largest companies in the US, implying they were meaningful contributors to the overall US market’s return. However, historical data show that this too is nothing new.
Defining a stock’s return contribution as its total return weighted by its beginning-ofperiod market capitalization weight, we see that Apple’s contribution to the US market for the period 2013–2020 was 19.68%. How does this figure compare to other top return contributors? Exhibit 5 illustrates the top return contribution and the annualized US market return over rolling eight-year periods since 1927, revealing instances of return contributions by the likes of AT&T, General Motors, and General Electric that were
comparable to, or even exceeded, that of Apple in 2013–2020.

FOTW (FLAVOR OF THE WEEK)
If history is any guide, the FANMAG acronym will eventually be replaced by another trendy name. For example, stock market historians will remember the Nifty Fifty in the 1960s and 70s, a set of 50 blue-chip stocks like Coca-Cola and General Electric. The early 2000s witnessed increasing adoption of the acronym BRIC, representing investment opportunities in the fast-growing emerging economies of Brazil, Russia, India, and China. More recently, the WATCH companies—Walmart, Amazon, Target, Costco, and Home Depot—have also gained traction in the market’s lexicon.

While documenting trends in finance is entertaining, there is little evidence that investors can spot these trends in advance in a way that would enable market-beating performance. Moreover, concentrated bets on high-flying stocks can expose investors to idiosyncratic risks and a wider range of possible outcomes. By contrast, a sound investment approach based on financial science emphasizes the importance of broadly diversified portfolios that provide exposure to a vast array of companies and sectors to help manage risks, increase flexibility in implementation, and increase the reliability of outcomes.

–  Kenneth French, PhD
Director and Consultant

_____________________________________________________________________

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Any Adult Child with a Serious Illness Needs a Health Care Power of Attorney

Having a child who is critically ill is the worst nightmare for every parent. This can be even more problematic when your child is legally classified as an adult because once they turn 18, you do not have the automatic ability to make decisions for them or see their health care records.

If your child is of college-age or has turned 18 in their senior year of high school and is taken to the hospital when you were not around, the hospital legally is not able to provide you with information about their condition without proper consent. If your child is critically ill and has passed out and is unable to provide consent, this can create a medical nightmare for you and your loved ones.

Make sure that you consider the needs of the entire family when crafting a health care power of attorney and providing appropriate consent that aligns with HIPAA requirements.

An estate planning lawyer can help you create these documents based on who needs to receive what details and create these documents for your entire family including any adult children who are currently coping with a serious illness and rely on your assistance to manage it or help with their health care concerns. For more information, schedule a consultation with an estate planning lawyer.

Can I Revoke a Living Trust?

A living trust is also referred to as a revocable trust which, as the name implies, empowers you to make decisions while you are still alive about the purpose of the trust or even its existence. This is because a revocable trust is a flexible financial structure or legal entity that empowers the person who creates it to remove, alter or change the trust assets or to amend the trust itself or alter beneficiaries at any point during their lifetime.

The very nature of a revocable trust is such that you can decide in the future that the terms or beneficiaries need to be updated. These small changes can be accomplished through small amendments, bigger changes might need to be achieved through revoking the trust altogether. 

If you wish to dissolve a revocable trust, it’s important to take the necessary steps to do so. You will need to remove all of the assets that have been transferred into it as a first step in dismantling a revocable trust you have already created. You would then want to fill out a formal revocation form to create a paper trail and written evidence of your intention to dissolve the trust. 

Sign this and get it notarized. Your local area might also require an additional step of filing that paperwork with a local probate or estate court. To make sure that you have all of the details managed in the revoking of an existing living trust, work directly with an estate planning lawyer who has experience in this field.     

Need a NJ estate planning lawyer to help you create or revoke a trust? Reach out today.

Does My Executor Need to Have the Skills of an Accountant or Attorney?

Most people choose a family member or close friend to serve as an executor or a personal representative of their estate. This means that when you pass away, this person once approved by the court will be able to handle the administration of your affairs and the closing out of your estate.

You are not obligated to choose a friend or family member to serve in this role and many people turn to other individuals or organizations. A professional, such as an accountant or attorney might be the right choice in the event that you do not find anyone in your family or current net worth to serve in this role.

An effective executor should bring certain qualities to the table, including being ethical, organized, committed to doing the best possible job, careful about protecting the best interests of the beneficiaries, and being tactful. As an executor, it is not necessary to have the expertise or skills brought to the table by an accountant or an attorney. However, it is common for personal representatives who are dealing with complex estates or those who are not familiar with all the responsibilities of serving in this role to engage in the services of these professionals to help with the management of the estate.

When retaining these professional services to assist with probate administration, payments will be made to these individuals from the estate itself. Serving as an executor does not require any professional certifications or licensure but it can be beneficial to think about the financial obligations and understanding of the person that you choose to appoint in this role.

Is It Enough to Tear Up My Durable Health Care Power of Attorney to Revoke It?

When a durable power of attorney for health care or living will is given to you voluntarily by another person, you always maintain the ability to revoke it so long as you are legally competent. One of the easiest ways to do this is to consult directly with your estate planning lawyer. Your lawyer might recommend the creation of a written statement that formally revokes this document.

Once you have created this written statement you might need to provide it to everyone who has a copy of your durable health care power of attorney. You should provide a copy of the revocation to the former power of attorney agent and every health care provider that might have previously had dealings with your former power of attorney agent. It is recommended that you destroy all copies of a revoked durable power of attorney for health care. However, you need to follow these additional steps to ensure that all of the aspects of closing out this initial power of attorney have been addressed.

As you can see, it can be somewhat complex to revoke a power of attorney but if it is the right decision for you at this point in time, you may need the support of an estate planning lawyer to guide you through the process and ensure that you have taken care of all of the details. Bear in mind that when you revoke a power of attorney and do not establish a new one, there is no one appointed in this role to make decisions on your behalf if you are unable to do so.

How We Embraced The ‘Swirl’

A Taoist story tells of an old man who accidentally fell into the river rapids leading to a high and dangerous waterfall. Onlookers feared for his life. Miraculously, he came out alive and unharmed downstream at the bottom of the falls. People asked him how he managed to survive.
“I accommodated myself to the water, not the water to me. Without thinking, I allowed myself to be shaped by it. Plunging into the swirl, I came out with the swirl. This is how I survived.”

Think back to March when the government shutdowns were starting. Think about the forecasts and predictions being made.

By late March, the S&P 500 had sold off over 30% of its value from its high in the middle of February, and small caps had sold off even more. Looking back on the markets and the dreary expectations, would you have expected global markets to post double-digit returns for the year? Would you have guessed that emerging market stocks would perform in line with the S&P 500 for the year, with both markets up over 18%?(3) What about small caps? Would you have expected U.S. small cap stocks to return 20% for the year when there was so much uncertainty around whether many of these companies could survive the pandemic?

The changing landscape from COVID benefited companies like Amazon and Zoom, so their growth during the year made sense, but would you have expected Tesla to post such extraordinary gains? The stock closed 2019 at less than $84 per share, but by the end of 2020, it was trading over $700 per share.(5) Tesla was added to the S&P 500 in December with a total market value of over $600 billion, making it the largest stock ever added to the index.(6) Looking back, we would like to believe we saw it coming (or at least that the signs were there), but if we are honest – doubling down on Tesla in January 2020 looked like a bet against the ‘smart money.’ At the end of 2019, roughly one out of every five shares of Tesla were betting on the stock price falling, not going up!

When I look at 2020, I am reminded that whether we are talking about industries or individual stocks, predicting the market is extremely difficult. Some people get lucky, but the skill to have repeat performance is rare. A recent study performed by S&P Dow Jones found that the top-performing funds from June 2010 through June 2015 were more likely to liquidate or change their investment style than to continue to outperform over the next five years. And that is the smart money – these are funds managed by professionals that invest millions in trying to be the best and have the “edge”.

We call this the loser’s game, and we choose not to play it – you are working & have worked too hard to accumulate your wealth. Instead,
  •  We have designed our clients portfolios to flow with the markets, not to time or try to predict the markets;
  • We invest across hundreds of stocks, dozens of countries and all sectors;
  • In 2020, amidst the uncertainty, we rebalanced our client’s portfolios to take advantage of lower prices and (if possible) tax losses harvested to offset capital gains in other areas of your portfolio – we focused on what we could control;
  • We continue to balance the stock risk in your portfolio with high quality fixed income to dampen changes in your total portfolio value; and
  • We stick with the strategy that we decided upon before the emotions took over.
In other words, we plunge with the swirl, and we come out with the swirl – this is how we help you progress towards achieving success with your financial plan.

 

 

 

 

 

 

 

 

 

 

Inflation Could Harm Your Retirement Without Careful Planning

Many people work their entire lives for the hope of a well-deserved and peaceful retirement. With increasing longevity and the rising costs of health care, however, it’s important to make sure not to exclude the possibility of inflation impacting your estate planning.

Your retirement funds might make sense now and your projected retirement savings could cover a good portion of your day to day living expenses, but if you have not fully incorporated the possibility of long term care expenses or the rising cost of inflation, your cost of living could spike significantly.

Consider that even a 3% increase in inflation would mean that the general cost of living can double within just 24 years. Even if you are not 24 years away from retirement, increasing longevity means that you might spend a few decades in retirement after exiting the workforce and relying on all of your retirement funds for that entire period. Health care expenses are also growing at a much faster rate than general expenses.

In fact, over half of retirees in a recent study said that they were concerned that rising health care costs and one of the biggest risks to their overall retirement security, and those risks are only expected to increase. For example, overall health care costs are anticipated to rise by 5.5% every single year over the next 10. Making a plan now and consulting with your financial and estate planning professional can help you to have a holistic approach towards your own financial future.

What You Need to Know About Affording an Estate Plan

The majority of Americans don’t have a plan in place but estate planning is not only for wealthy individuals and business owners. A basic plan can include a power of attorney, a living will, and a will.

Fewer than one third of people living in the United States today have even one or more of these documents, according to a 2020 research survey by Caring.com. The perception of cost is one of the biggest hinderances to people scheduling a consultation with an estate planning lawyer, but in some cases, the perceived cost is much higher than the real cost.

Getting an estate plan in place requires you to do some work in advance to decide what you want to accomplish with your estate plan and to look for an attorney who offers the ability to complete all of those documents or strategies together. A standard will meets the basic needs of most people and often doesn’t cost as much as you think but this is a critical document because you will appoint who will oversee the distribution of assets and manage creditors, and you’ll name a guardian if you have minor children.

Wills can become complicated if you have advanced family dynamics, such as if you or your spouse have been married before or have a mixed family. But you’ll want to have the ability to discuss your options with an estate planning lawyer particularly if you want your loved ones to be able to avoid probate. Ask around and get recommendations for estate planning lawyer so that you have a broad reach in terms of the approach they take to your planning as well as the overall cost.

Your Home & Estate Planning: Avoid This Mistake

Sadly, far too many children face the loss of their elderly parents and then have to take on the complicated task of selling a parent’s home. In the event that the will states that the children will receive the proceeds from the real estate’s sale, there are two potential outcomes that could occur based on whether or not the parent had appropriate estate planning in place.

Either children are eligible to receive the full proceeds of the parent’s home with no capital gains tax responsibility or they will instead owe tens of thousands of dollars to the IRS by paying this. This inadvertent and simple mistake happens when parents add their children to the title while they are still alive. It makes sense that you want the house to be able to pass to your kids so you retitle it in their name as well as yours so that the house automatically transfers.

However, this perceived kindness can end up costing your beneficiaries thousands of dollars in unnecessary taxes. It is far better to have an estate planning strategy in place that can help you to accomplish these goals without generating massive tax liabilities. It can be very difficult to go through the process of discovering these challenges after the fact and you definitely don’t want your loved ones attempting to cope with this on their own. Make sure that you work directly with an estate planning lawyer and a financial professional to ensure that you’ve taken care of all of the details related to your estate planning so that assets like your home can pass as easily as possible to your loved ones.

Study Finds High Net Worth Individuals Preparing for Possible Tax Increases

 

Tax increases on local or the state level could be levied against real estate in the near future. A new CNBC millionaires’ survey identified that 43% of millionaires shared that they already pay too much in taxes. Many of those millionaires are bracing for a potential tax hike in the next year due to the new presidential administration.

The survey included 750 people who had investible assets of larger than $1 million. The wealthy expect some form of tax increases due to the new administration as well as soaring deficits and spending. Those who responded to the survey said they planned few changes in their financial strategies or investments due to potential tax increases.

However, 16% of them said that they planned to make changes to their giving or estate planning. If you are part of a high net worth couple or family, it’s a good idea to consult with an experienced tax professional in addition to an estate planning lawyer to discuss your next steps and to create a plan for potential tax increases.

No matter what changes are on the horizon, you could on your team of professionals to help you adapt and create a plan in line with state or federal changes or even shifts in your own strategy or family.

The support of a dedicated estate planning lawyer can help you navigate changes as they come and keep you abreast of important issues that arise in the state or federal planning landscape.

 

Irrevocable Trusts and Crummey Powers

If you created an irrevocable trust in 2020, you need to ensure that certain kinds of gifts that are made to the trustee to pay premiums are kept up to date. One aspect of an irrevocable trust that this influences are known as Crummey powers or annual demand powers.

This allows gifts to qualify for the gift tax annual exclusion and this means a written notice for any 2020 gifts or gifts in future years will then need to be issued. This can be very complicated if you have transfers made to multiple trusts in addition to outright gifts made directly to heirs.

You will then have to prioritize those gifts based on the terms of the trust and the dates to determine whether or not those gifts do indeed qualify for the annual exclusion. This can get even more complicated if you use other estate planning strategies, such as a generation skipping transfer tax.

This may require you to file a gift tax return to allocate the exemption for the GST and to ensure that the trust stays exempt from GST. As you can see, these strategies can be powerful and helpful for your estate plan but only when they are appropriately drafted, organized and followed through. For more support with advanced estate planning strategies, schedule a consultation with a trusted estate planning lawyer.

Tax Authorities Claim That Executors Undervalued Prince’s Estate

 

Controversy was generated when pop singer Prince passed away without a will or any other estate plan in place. Calculations from the IRS indicated that executors of the estate undervalued the overall assets inside by approximately 50% or $80 million.

According to the IRS, Prince’s total estate is worth over $163 million. The valuation that had previously been submitted by Comerica Bank and Trust, the administrator of the estate, was just over $82 million. According to court documents, the major discrepancy here relates to the recording interests and music publishing of Prince.

This generates a federal tax liability of over $32 million, which would roughly double the tax bill associated with the previous valuation. This would also include a $6.4 million penalty on the estate if it can be shown that there was indeed a substantial undervaluation of the assets.

The six sibling heirs of Prince have been caught up in this controversy since the pop singer passed away unexpectedly in April 2016. This has led to one of the most complicated and expensive probate estates in Minnesota. You can avoid this mistake by having a will and other basic estate planning documents in place well in advance of your passing

Should You Create an Irrevocable Trust for Your Spouse?

Trusts are a popular estate planning strategy because they accomplish multiple goals at once, including privacy, greater layers of control and allowing for support to the beneficiaries that you choose. When it comes to thinking about your taxable estate, you may be able to move some assets inside a trust for proper management, thus giving up control.

Creating an irrevocable trust now could help you to take advantage of today’s high exemption levels. Staying under the exemption amount means that you get money out of an estate now without any gift tax consequences and you can still enable access to the funds through a spouse with the remainder of the funds going to other heirs. These are called spousal lifetime access trusts or SLATs.

These are irrevocable trusts that have a spouse as a beneficiary and even grandchildren or children as remainder beneficiaries. Your spouse is eligible to tap into the assets inside the trust for education, health or general living expenses which can also benefit you indirectly. While you can use a separate SLAT created by your spouse naming you as the beneficiary, be careful about this being identical as this will raise questions with the IRS. For more information about this process, schedule a consultation with a lawyer.

Our estate planning law office can help you decide what kinds of strategies are most appropriate for your needs.

Is Now the Right Time to Use Your Lifetime Gift Exclusion?

If you currently own an asset that you anticipate is going to appreciate over the coming years, you may want to take advantage of exclusions that are available to you today.

The IRS has recently released guidance that indicates that you will not suffer a penalty for using up your gift exclusion exemption while you are still alive. If you pass away when an exemption is lower and had held on to an appreciated asset up to that time, the estate tax will be higher because a greater portion of the estate is taxable.

If you use up the exclusion, however, and Congress does not choose to move forward with lowering the lifetime exemption amount, you can still reap advantages from this for your loved ones because there will be less in your overall estate to be taxed when you pass away.

Remember, of course, that gifted assets do carry over a cost basis that goes to the person receiving the gift. You may be in a better position to hold on to the asset until you pass away so that your heirs can benefit from a step up in basis that it will receive in that time.

This also gives you a greater deal of security in case you were to need the money for an uncertain future, such as unexpected costs with long term care. Gifting appreciated assets is another strategy you may be able to leverage when it comes to gifting. It doesn’t sacrifice any economic security in the short term but remember that the person who receives this benefit must have the item for at least a year. Make sure you consult with your experienced estate planning lawyer to learn more about some of the strategies you can use for the purposes of protecting your estate.

What Is Portability as It Relates to My Estate?

The Tax Relief Unemployment Insurance Reauthorization and Job Creation Act was signed into law in December 2010. This made significant changes to federal estate taxes, generation skipping transfer taxes, and gift taxes.

This was the first time that the potability of an estate tax exemption was introduced. Portability is a concept that is only available to married couples. The amount of an estate tax exemption that is not used for a deceased spouse’s estate can be transferred to the surviving spouse in the event that the first spouse passes away and the value of their estate does not use up all of the exemption.

This then enables the surviving spouse to use the deceased spouse’s unused tax exemption in addition to their own exemption when the surviving spouse passes away. This is a federal level exemption and state level exemptions are only available in two locations, Hawaii and Maryland as of 2020.

The federal estate tax exemption is $11.58 million for those deaths that occurred in 2020. Exemptions are amounts that are subtracted from the total value of an estate and only the balance that remains after this is applied is subject to the estate tax.

Because of the substantial size of this in the United States, it is very rare for many people to trigger the estate tax amount. For more information about this might apply to you and various estate planning strategies you can use, set up a time to meet with an estate planning attorney.

What is a Charitable Lead Trust?

There are many different kinds of trusts and you might use one or more to accomplish the goals in your estate plan. Because trusts can be complicated and minor mistakes can prove very problematic in the administration of the trust, you should use the support of an estate planning attorney to create yours.

You can create tax savings without giving up the assets that you want your family to receive some day by using a charitable lead trust and a cause you care about. A charitable lead annuity trust pays a certain amount to the philanthropic organization or foundation of your choice and is most attractive when interest rates are low. A charitable lead unitrust, on the other hand, pays a variable amount each year based on the total valuation of the assets inside the trust.

With a unitrust, if the assets inside the trust increase in value, the payments made to your chosen organization go up too. You can fund your donation in a charitable lead trust using real estate, appreciated securities, closely held stock or cash. You’ll want to consult with your legal and financial advisor before deciding to move forward with a charitable lead trust. It is very important that all of the details are carefully evaluated and structured to leverage maximum achievement of your goals.

Can I Reduce My Estate Taxes by Paying for Education Now?

If you are looking ahead to your future estate taxes and looking for a strategy to minimize them, a consultation with an estate planning lawyer can help you to address many of the most common issues and concerns that come up in connection to this.

Savvy planning can make things easier for your loved ones in the short term but also can benefit you in the long term. Paying tuition or medical bills doesn’t count towards your annual exclusion or the estate tax exemption so long as the checks are written directly to the school or health care provider. This can help to reduce the size of your taxable estate and can help provide a valuable gift to your loved ones who may need the money for their education or their expenses.

Many people are currently reevaluating their charitable contributions and gifting to grandchildren to determine if the strategies they had in place prior to the pandemic are sustainable. If you make any short term changes that reduce your gifting strategy, you’ll still want to have a plan for revisiting these in future times to ensure that they align with what you intend to accomplish with your family.

During these uncertain times when there are many possible changes with estate laws in the works and a great deal of unknowns as it relates to the pandemic, it’s important to have relationships with trusted professionals like estate planning lawyers to allow yourself to make informed decisions as needed.

Have You Planned for Your Invisible Estate?

Many people often make the mistake of assuming that their will controls the distribution of their full estate. It’s easy to forget that certain aspects are automatically excluded under the terms of your will.

There are three common methods by which assets might be transferred to your beneficiaries after your death outside of what’s named in your will or what goes through the probate process in your state. These include beneficiary designations, a will or a trust or joint ownership with right of survivorship.

Beneficiary designations are common with IRAs, 401(k) plans, pensions and life insurance. The accounts are distributed directly to the beneficiary that you name on the form when you pass away and your will does not have any say over these benefits. If you own property as tenants in common with another person, your 50% of the property will follow the provisions in your will.

However, jointly owned property with right of survivorship generally goes to the surviving joint owner regardless of what is stated in the will. If you have questions about this process or how to leverage your own individual estate planning, schedule a consultation with an experienced and knowledgeable lawyer in your area today.

How Much Tax Could Someone Above the Estate Tax Threshold Pay?

When you pass away, your estate could be taxed above certain thresholds established on an annual basis. This has risen to $11.7 million in 2021 with an exemption that is set to expire at the end of 2025.

However, it is possible that legislative and fiscal pressures could push a change to occur sooner rather than later. This large exemption means that many people have put off the process of estate planning altogether but this could be a significant mistake.

The federal estate tax and gift tax is currently 40% on those amounts over the $11.58 million threshold in 2020. This is outside of the fact that some individual states can also levy their own estate tax. If the gift exemption is decreased by a lot by any oncoming legislation, this will make it very challenging for people with higher amounts of assets to minimize their taxable estates.

This is why it’s important to have an established relationship with an estate planning lawyer to help keep you aware of these issues and help you to navigate these circumstances when they occur.

Our estate planning law office can help support you as you move forward with your planning process.