The recent passing of music legend Prince serves as yet another reminder to get your estate plan in place. As reported in the press, Prince’s sister has filed papers with the Court alleging that her brother died without a will. Dying without a will in place is called “intestate.” You can find my summary of Indiana’s intestate laws, here and here. The intestate laws act as a default estate plan, and very likely may not include all of your intentions.
With 2016 only a few hours away, here’s a look at changes to the Federal estate and gift tax exemptions for 2016.
- The Federal Estate Tax Exemption amount will be $5.45 million per individual, an inflation-adjusted increase from $5.43 million in 2015.
- The annual gift tax exclusion amount remains at $14,000, the same as in 2015.
The increase in the Federal Estate Tax Exemption means an individual can leave $5.45 million to her beneficiaries without Federal Estate Tax, or gift tax during her lifetime. In 2016, a married couple will be able to collectively transfer $10.9 million without Federal Estate Tax, or gift taxes during their lifetimes.
I just tweeted an article by a Boston financial planner, Dee Lee, who discusses the importance of parents with minor children getting their estate plans in place. I strongly feel that setting up an estate plan with protections for minor children is just as important as the other aspects of parenting for which we take so much care and concern. I have written about this here and here. Just like finding the right pediatrician, car seat, and child care, an estate plan is an essential protection for your children. This writer said it so well, that I am posting here some highlights — and a good reminder — from her article:
“Experts estimate that less than 35% of individuals have wills. This is one thing people procrastinate about, especially parents with young children.
The IRS announced the 2015 Gift and Estate Tax Exemption Amounts, along with other tax changes, here. For persons dying in 2015, the Federal Estate Tax exemption amount has increased to to $5,430,000, up from the 2014 exclusion amount of $5,340,000. This means that, collectively, in 2015 a married couple can exclude $10,860,000 from Federal Estate Tax. The gift tax annual exclusion amount remains $14,000 in 2015. This means that in 2015, as in 2014, you can transfer up to $14,000 per individual without the necessity of filing a Gift Tax Return.
Yesterday I visited Indianapolis’s Cat Haven, a wonderful local non-profit that provides homes for abandoned cats. Many of these cats are elderly (10 years old or older), which gave me pause to consider how a cat that age would end up abandoned. It seems likely to me that those animals may very well have been loved by an owner who passed away, leaving no one to care for the beloved pet.
Fellow legal bloggers Danielle and Andy Mayoras (find them here and here) have a great article today about end-of-life lessons to be learned from Joan River’s passing. All estate plans should include planning for incapacity and end-of-life decision making. The Mayoras’ article excellently explains why this is so important.