2021 Year-End Estate Planning Checklist

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Year-end can be a beneficial time to review and update your estate planning documents and implement strategies to reduce taxes. Here are 5 areas to review that may help reduce your tax liability and improve your overall estate plan.

General Power of Attorney (POA)

Confirm that your designated power of attorney is up to date. A designated power of attorney is a legal document that authorizes a person or persons of your choosing to oversee your business, personal, legal, or financial affairs if you are unable to do so. 

Healthcare Power of Attorney (HCPA)

Review and update your healthcare power of attorney. A healthcare power of attorney is a legal document that authorizes an individual of your choosing to make decisions about your medical care if you are unable to do so.

Last Will and Testament

Review and update the details of your will, including your executor and wishes for asset distribution among your beneficiaries. A Last Will and Testament is the legal document that indicates how you would like your property allocated at the time of your death. It can also allow you to appoint a guardian for your children. Without a will, you may not be able to direct what happens to your estate after you pass.

If you have children, review your named guardian, and confirm that your estate plan includes a legal tool, such as a trust, for safeguarding their financial future.

Estate Tax Exclusions

Currently, the lifetime gift tax exclusion is $11,700,000 and is on track to decrease to $5.49 million on January 1, 2026. Although Congress can vote to make the $11.7 million exception permanent, the Biden administration has pledged to drastically decrease the Unified Credit for Estate taxes from $11.7 million to $3.5 million, and the credit for gift taxes to $1 million. Individuals who are concerned their wealth may surpass any future unified tax credit should consider additional estate planning strategies, such as trusts, to help reduce that tax impact for their beneficiaries in the future.

Gift Tax Exclusion

Since estate and tax laws regarding gifts can change periodically, review any gifts, and update, as necessary. If you are a high-net-worth individual, consider taking advantage of the annual gift tax exclusion. The gift tax exclusion allows individuals to gift up to $15,000 to another individual without having to pay taxes on the gift.

Get Legal Guidance

If you have questions regarding year-end estate planning or potential steps you might consider to reduce estate taxes, please reach out to our office at (914) 228-7448.

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