By Harry S. Margolis

How often should you review your estate plan? The answer, like that to many other legal questions, is it depends. It depends on how old you are and whether there has been a significant change in your circumstances. If you are over age 60 and you haven't updated your estate plan in many decades (which is the norm among our clients), it's almost certain that you need to update your documents. After that, you should review your plan every five years or so. But if you're younger, you don't need to do so nearly as often.

Age

Here are a few age ranges and what they mean in terms of estate planning:

By Harry S. Margolis

With the threshold for federal estate taxes now at $11.2 million (in 2018) you probably don't have to worry about it or do any planning to avoid it. Very few Americans have federally taxable estates. But the threshold for the Massachusetts residents is $1 million. So, if you live in Massachusetts and your estate is above $1 million -- not so hard if you own a house in many communities in the state -- should you engage in estate tax planning?

By Harry S. Margolis

Last month while it was still pending, I wrote a post about the competing versions of the GOP tax law with regard to federal estate tax. The House bill would have eliminated it entirely. The Senate version, which ultimately passed, doubled the threshold for taxation to $11.2 million for individuals and $22.4 million for married couples. At the risk of getting too political, I made my pitch as to why an estate tax is important in terms of equity and democracy.

By Harry S. Margolis

While it will take some time to understand all of the effects of the new tax law, and most of it has to do with reducing the corporate tax rate from 35% to 21%, here's some of what we know that relates to individual taxpayers. But before we get into the details, be aware that almost everything listed below sunsets after 2025, with the tax structure reverting to its current form in 2026 unless Congress acts between now and then. The corporate tax rate cut does not sunset. Here are the principal changes:

By Harry S. Margolis

Both the House and Senate versions of the tax bill would increase the exemption for estate taxes from the current $5.5 million for individuals (and $11 million for married couples) to $11 million (and $22 million, respectively). The House bill would ultimately eliminate the tax all together in 2024. This is the culmination of a long-term campaign against the estate tax which began more than two decades ago when the threshold for taxation was just $600,000.

Already, the result is that only about 5,000 estates per year pay estate taxes, down from 52,000 in 2000.

By Harry S. Margolis

So, what's a QTIP trust? "QTIP" stands for qualified terminable interest property. Total legal gobbledygook, right? So forget the words. What it means is a trust that you leave for your spouse that gives him the right to all of the income and limits his right to the principal. Those limits can be total, meaning no right to principal, or minor, meaning simply limited by the HEMS standard (for health, education, maintenance and financial security) or fully available but controlled by a trustee other than your spouse.  

By Harry S. Margolis

With the threshold for federal estate taxes set at $5.49 million this year (it adjusts each year for inflation), very few estates have to file a federal estate tax return. In contrast, the Massachusetts threshold is $1 million, meaning that many more estates must file a Massachusetts return. For estates that fall between $1 million and $5.49 million, it can still make sense to file a federal return if the decedent left a surviving spouse.

This is for two reasons: portability and capital gains step up.

By Harry S. Margolis

Several of President Donald Trump's tax plans have been described as threats to the ability of charities to raise money. While I oppose just about everything the new president stands for, there's one tax proposal I can get behind -- limiting total annual itemized deductions to $100,000 per taxpayer ($200,000 per couple).

By Harry S. Margolis

While the threshold for the federal estate tax is $5.49 million this year, the Massachusetts threshold is $1 million. Fortunately, the Massachusetts rates are much lower than the federal rate, graduated from 0.8% to 16% on estates exceeding $10 million, a flat 40%. (For estates in the $1 million to $2 million range, the marginal rate is 6.4% or 7.2%.) Unfortunately, in Massachusetts if the estate exceeds that threshold, the entire estate gets taxed. The result is a much higher marginal rate.

Five leading elder law attorneys have created theTrump Policy Analysis Group (TPAG)[1] to consider probable changes in law that will affect older Americans and those with special needs.  Initially TPAG will focus on entitlements, public benefits, tax, special needs planning, and veterans’ benefits.

TPAG Members and Experience

Michael Gilfix of Palo Alto, California, A. Frank Johns of Greensboro, North Carolina, Harry S. Margolis of Boston, Tim Nay of Portland, Oregon, and Vincent J. Russo of Long Beach, New York, together have over 160 years experience advising individuals and families and Social Security, Medicare, Medicaid, tax, long-term care, veterans’ benefits, and special needs planning.  They are established authors, speakers, and experts and include founders and leaders of national organizations, including the National Academy of Elder Law Attorneys, addressing the needs of aging and vulnerable populations.

Following is their initial analysis.