By: Randall A. Denha, J.D., LL.M.*
The holiday season has come and gone, and here we are in the year 2020. Hard to believe. Remember that just yesterday we were worried about Y2K? For many of us, the start of a new year can be a time of empty commitment to self-betterment.
Meaningful resolutions are often made but are rarely kept. Instead of purchasing a gym membership or pretending that we will enjoy eating kale and tofu cakes as our entree this year, perhaps we should resolve to secure our family’s future by planning for the unfortunate inevitabilities of incapacity and death. There is no time like the present to evaluate the estate planning that we have (or have not) undertaken.
Relevant considerations for you and your family may include:
- Is my current estate plan structured in a way that will promote efficient administration and minimize family effort and expense, or even controversy, at my death?
- Are my assets structured in a way that limits my exposure to potential liability?
- Does my estate plan need to be updated in light of recent tax legislation?
- Do I have Powers of Attorney and a Living Will that express my wishes and allow my family to make financial and health care decisions in the event of my incapacity?
- Have I implemented planning that will allow my business to continue operating after my incapacity or death?
- Will my qualified retirement account(s) pass to my beneficiaries in a protected and tax-efficient manner, in light of recent legislation?
- Have my adult children (age 18 and over) executed the necessary basic legal documentation that would allow me to assist with their affairs in the case of illness?
Significant law changes in areas of estate tax and retirement account inheritance:
Significant changes to the federal gift and estate tax system went into effect in 2018. Even more recently, Congress has very recently passed legislation to substantially alter income tax deferral opportunities with regard to inherited retirement accounts. The SECURE Act – the “Setting Every Community Up for Retirement Enhancement” Act – was signed into law by President Trump on December 20, 2019. The law generally took effect on January 1, 2020. The SECURE Act encompasses a lot of changes to retirement assets, including changes to the rules for distributions of inherited retirement assets, the postponement of the Required Beginning Date (now April 1 of the year after the year in which you turn 72), and the elimination of the age limit for contributing to a traditional IRA. For those who implemented their estate plan prior to the legislation, these new laws could lead to unintended consequences and even tax inefficiencies.
While tax minimization is a result that most clients would prefer, non-tax-related estate planning issues and objectives may be even more important for many of us. In today’s litigious and bureaucratic social climate, a thoroughly-considered estate plan is vital to a family’s future. Careful planning can help ensure: (a) that the time leading up to your death is less difficult and stressful for your family, (b) that your estate is able to be settled in an efficient and cost-effective manner, and (c) that your beneficiaries are protected against subsequent lawsuits or divorce. These issues are central in the planning efforts that I always undertake with clients.
Move estate and related planning to the top of your 2020 resolutions list. There is no time like the present to implement or update a plan that will be meaningful to your family.
*Randall A. Denha, J.D., LL.M.., principal and founder of the law firm of Denha & Associates, PLLC with offices in Birmingham, MI and West Bloomfield, MI. Mr. Denha continues to be recognized as a “Super Lawyer” by Michigan Super Lawyers in the areas of Trusts and Estates Law; a “Top Lawyer” by D Business Magazine in the areas of Estate Planning and Tax Law; a Five Star Wealth Planning Professional; Michigan Best Lawyers; Michigan Lawyer of Distinction and a New York Times Top Attorney in Michigan. Mr. Denha can be reached at 248-265-4100 or by email at firstname.lastname@example.org