4 Estate Planning Law Changes for 2019
Every year, we provide our clients with legal updates that have occurred which may affect your current Estate Plan. It’s important to remember that Estate Planning is an ever-changing field. Think of creating and updating an Estate Plan as an ongoing process, rather than a one-time event.
Here are 4 estate planning law changes that occurred in the past year. You may want to keep them in mind as you consider whether it might be time to review or update your Trust. (We typically recommend having your Estate Plan reviewed by an attorney every 5 years.)
#1 Trust Decanting:
Trust decanting has arrived in California! What has been available in other states for some time has now finally made its way to the Golden State.
By approving trust decanting, the California legislature has provided a way to change old irrevocable trust provisions. This is especially relevant for allocated A/B trusts. A/B trusts were once very common for married couples, back when the Estate Tax was much lower, around $1 million.
If you are a surviving spouse with an allocated A/B trust, you can now amend the previously irrevocable B trust. This can be extremely advantageous to avoid capital gains taxes within the B trust. It can also help you access “B” trust assets, which is especially helpful if “A” trust assets start to dwindle. For more information on trust decanting, check out this post.
#2 Organ Donation:
Your Advance Healthcare Directive, or medical Power of Attorney, allows you to express your wishes for organ donation. Starting last year, the statutory Advance Healthcare Directive now makes organ donation the default provision. The purpose of this change is to increase the state’s supply of organs for transplant.
If you do not wish to donate your organs, you will want to specify that preference in your Advance Healthcare Directive. Learn more about this law change here.
#3 Contesting Trusts:
New case law has made it more difficult for those not named in the instrument to contest a trust. In the case of Barefoot v. Jennings, the court held that only trustees and beneficiaries have standing to bring a petition to contest a trust. This change offers an extra measure of protection against those who may want to overturn your Estate Plan after you pass.
#4 Tax Changes:
The Federal Estate tax exemption for 2019 has increased to $11.4 million. The top marginal rate remains at 40%. The gift tax annual exclusion amount remains at $15,000. That means you can give away $15,000 to as many people as you like this year tax-free.
Need to update your estate plan?
If you feel that any of these changes necessitate a change in your Estate Plan, or if it has been more than 5 years since you have had your estate plan reviewed, we recommend you seek the counsel of an experienced Estate Planning attorney to assist you in bringing your Estate Plan up-to-date.
Daniel Hunt is lead attorney and owner at Law Offices of Daniel Hunt. He is also a California State Bar Certified Legal Specialist in Estate Planning, Trusts & Probate Law.