The New Tax Law and the Common Estate

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new tax lawOn December 22, 2017, Congress passed a new tax law that includes doubling the estate tax and gift tax basic exclusion amount. According to the IRS, the new tax law increases the basic exclusion amount from $5 million to $10 million. Additionally, the new exclusion amount will be in effect from January 1, 2018, until December 31, 2025, while the annual adjustment for inflation will continue. (As of this writing the IRS has yet to determine the inflation-adjusted exclusion amount for 2018. Presumably, it should be around $11,200,000.00).

So, what does this change mean for the common estate? Well, as defined by The Common Executor, the common estate remains the same. However, depending on where a person lives, affluent estates may qualify as a common estate. Accordingly, while the rules for the estate tax and gift tax remain the same as described in the article The Estate Tax and Gift Tax: The Impact on your Estate, the new tax law has a minimal effect on the common estate.

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Choosing a Bank as Executor for Your Estate

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choosing a bankChoosing a bank to serve as executor for your estate has its advantages and disadvantages. In most common estates, people will choose a trustworthy, organized person to serve as executor of their estate. However, this is not always the case. In some common estates, people will choose a bank to serve as executor for the following reasons:

  • To keep family harmony by avoiding disputes among family.
  • Allow family members to grieve without the stress of administering an estate.

Although these are all valid reasons for choosing a bank as executor, you must give careful consideration to the advantages and disadvantages of such a choice. Without proper consideration, you may make a choice that could prove costly to your estate.

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The Final Steps to Complete Your Durable Power of Attorney for Finances

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final steps

After drafting your Durable Power of Attorney for Finances, there are essential final steps to completing the document. Accordingly, these final steps include the following:

  1. Validate the document.
  2. Decide what to do with the document.

Although both steps are fairly simple to complete, state law determines how to complete each step. Additionally, as mentioned in the article Additional Considerations for Your Durable Power of Attorney for Finances, deciding what to do with the document depends on the type of document you chose to complete. Regardless, after completing the final steps, you will have an effective Durable Power of Attorney for Finances.

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Additional Considerations for Your Durable Power of Attorney for Finances

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durable power of attorney for financesAfter choosing an agent for your Durable Power of Attorney for Finances, you must also consider the type. There are two types of Durable Powers of Attorney for Finances to consider:

  1. The type that takes effect immediately. The Durable Power of Attorney for Finances takes effect immediately after signing the document.
  2. Otherwise known as a Springing Power of Attorney, this type takes effect only when and if you become incapacitated.

Moreover, each type functions differently and your choice depends on how you feel about your selected agent. Therefore, if you selected a reliable agent according to the article Considerations for Choosing an Agent for Your Durable Power of Attorney for Finances, it will be a painless decision.

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Validating and Distributing Your Medical Care Documents

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medical care documentsAfter completing your medical care documents, validating and distributing the documents are crucial steps in completing your estate plan. As mentioned in the article A Coherent Estate Plan Consists of More Than Just a Will, a Living Will and Health Care Proxy must be part of the estate plan to make it coherent. However, completing the medical care documents is not enough. Each medical care document needs validation to carry any weight. Additionally, to make your medical care wishes known, distributing the documents to the proper people becomes necessary. Therefore, validating and distributing your medical care documents are important steps in the estate planning process. 

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Difficult Decisions for a Health Care Proxy

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difficult decisionsEven if a Living Will exists in the estate plan, difficult decisions still may occur for the health care proxy. As mentioned in the article The Need for a Living Will in Your Estate Plan, there is no way to predict the illness that may incapacitate an individual. Therefore, instructions to handle certain treatments for an illness may not exist in the Living Will. Consequently, the health care proxy for an incapacitated individual may face difficult decisions.

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The Need for a Living Will in Your Estate Plan

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Living Will in your estate planTo help your health care proxy render an informed decision, a Living Will in your estate plan is essential. The Living Will is a document that declares your wishes about life prolonging treatment if you become incapacitated. After choosing your health care proxy as detailed in the article Considerations for Choosing Your Health Care Proxy, the Living Will gives your doctors and health care proxy direction in deciding treatments for your condition while incapacitated. As a result, the Living Will in your estate plan becomes a vital document.

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Considerations for Choosing Your Health Care Proxy

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choosing your health care proxyChoosing your health care proxy is another crucial step in building a solid estate plan. As explained in the article A Coherent Estate Plan Consists of More Than Just a Will, the health care proxy is a document that names a person to render medical decisions for you while incapacitated. Unlike naming an agent for finances, choosing your health care proxy deserves more scrutiny. Since your health care proxy could be handling complex medical options and opinions, you need to ensure that the proxy is up to the task. Therefore, choosing your health care proxy deserves serious consideration.

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Considerations for Choosing an Agent for Your Durable Power of Attorney for Finances

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choosing an agentChoosing an agent for your Durable Power of Attorney for Finances deserves as much consideration as choosing the right executor. As described in the article A Coherent Estate Plan Consists of More Than Just a Will, estate planning involves taking care of yourself first. As such, the Durable Power of Attorney for Finances becomes an integral document for your estate plan.

The Durable Power of Attorney for Finances is a document that allows you to designate an agent to handle your finances in the event you become incapacitated. Additionally, the agent you choose has only the financial authority that you grant them in the document. Therefore, choosing an agent for your Durable Power of Attorney for Finances is vital to building a solid estate plan.

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