How long has it been since you reviewed your estate plan? Ten years? Five years? Even if it was in the last three years, there may be changes in tax and other laws that you need to know about.
Morris Hall, PLLC is recognized as one of the leading estate planning law firms in the Southwest. The firm focuses its practice exclusively on estate planning, and works with licensed financial advisors and CPAs to provide comprehensive estate planning solutions. As part of our service to you, we provide complimentary reviews to determine how recent changes in the law and improvements in estate planning strategies affect you now, and to assure that their impact on you and your beneficiaries will be the most advantageous.
Federal Law Updates
SECURE Act – On December 20, 2019, the SECURE Act became law. This act significantly changes the laws governing retirement accounts, especially concerning stretch and required minimum distribution provisions, and also other changes. It is now more important than ever to review, and in many cases, revise beneficiary designations of IRA, 401k, and 403b assets.
Increased Estate Tax Exemption – If you are married, you might no longer need an A/B trust. Today, the federal estate tax exemption is $11.58 million per person. One of the primary purposes of an A/B trust is to mitigate estate taxes, and very few Americans will now need protection against such tax. There are asset protection and conservation reasons for having an A/B trust, and many clients are electing to include disclaimer provisions to give the surviving spouse the option as to whether to divide the trust on the first death. This is a matter that should be considered and discussed with our firm.
Clark v. Rameker – The 2014 U.S. Supreme Court case of Clark v. Rameker, held that inherited IRAs are no longer protected from creditors in a bankruptcy. While Arizona law provides some protection for your beneficiaries who live in Arizona, to adequately protect your retirement assets from your beneficiaries’ ex-spouses, creditors, immaturity or other wasteful circumstances, such assets must be handled very carefully. Your trust, and not your beneficiaries individually, should be the beneficiary of such assets. It is very important that your trust be a “qualified trust” with conduit trust provisions under Code Section 401(a)(9) and corresponding regulations. Failure to include these detailed provisions in your trust could cost your beneficiaries significant state and federal income taxes, and could result in the loss of all of the retirement assets to others.
Recent Law Changes in Arizona and Improvements
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Community Property – Arizona is one of nine community property states. A proper Community Property Agreement will allow a surviving spouse to receive a full step-up in cost basis on a couple’s assets, which can eliminate both state and federal capital gains taxes. And for married couples, new provisions that can be added to your trust might allow your beneficiaries to avoid paying state and federal capital gains taxes upon both of your deaths.
Surviving Spouse Provision – There are many great protections under the Arizona Trust Code. However, there is one provision under which a surviving spouse could be required to account every year for every cent received by or spent from the decedent’s share of your trust, and to also obtain appraisals and other valuations of all assets annually. We have never had a client who was in favor of this. Fortunately, we can help clients opt out of this reporting necessity and exposure.
Certification of Trust – Under the Arizona Trust Code, there is a new Certification of Trust that can help you protect your privacy.
“Decanting” provisions – The Arizona Trust Code has “decanting” provisions that provide much greater flexibility and protection for surviving spouses and all other beneficiaries.
“Spendthrift” Trust Provisions – New provisions that create what are known as spendthrift irrevocable beneficiary trusts can give your beneficiaries enhanced protections from creditors, bankruptcy, lawsuits, divorce, immaturity, substance abuse, and other factors that could deprive them of what you leave for them.
Mental Health Care Power of Attorney – Surprising to most people, you, or your agents, cannot force doctors, hospitals and other health care providers to follow your directions under your health care directives. However, your wishes are much more likely to be followed if you have the updated and enhanced Living Will, Health Care Power of Attorney, Mental Health Care Power of Attorney and HIPAA documents that are now available. The updated Mental Health Care Power of Attorney will help assure that agents of your choosing can expedite the eligibility process for certain levels of mental health treatment without the necessity of a court appointing an attorney, physician and social worker to take over your care. In addition to the more robust documents that we have developed, we also now include a legal opinion to assure the health care providers of the viability of your documents.
Recent Law Changes in and Improvements
Community Property – is one of nine community property states. A proper Community Property Agreement will allow a surviving spouse to receive a full step-up in cost basis on a couple’s assets, which can eliminate both state and federal capital gains taxes for the survivor. And for married couples, new provisions may allow your beneficiaries to avoid paying capital state and federal gains taxes upon both of your deaths.
Certification of Trust – Under the Trust Code, there is a new Certification of Trust that can help you protect your privacy.
Decanting Code – has adopted the Uniform Decanting Code, which provides much greater flexibility and protection for surviving spouses and all other beneficiaries.
“Spendthrift” Trust Provisions – New provisions that create what are known as spendthrift irrevocable beneficiary trusts can give your beneficiaries enhanced protections from creditors, bankruptcy, lawsuits, divorce, immaturity, substance abuse, and other factors that could deprive them of what you leave for them.
Improved Health Care Documents – Surprising to most people, you, or your agents, cannot force doctors, hospitals and other health care providers to follow your directions under your health care directives. However, your wishes are much more likely to be followed if you have the updated and enhanced Living Will, Health Care Power of Attorney, and HIPAA documents that are now available.
Recent Law Changes: A Premier Law Firm For You
If not properly addressed, some of the above changes could cause very negative results to your estate planning goals. However, properly updating your trust and other estate planning documents can provide you and your beneficiaries with much better protection than has ever been available.
If you feel that your estate planning documents may be out of date due to recent law changes and improvements, contact us to arrange a complimentary consultation with one of our experienced attorneys today.
