Know latest changes in estate planning & tax law?


There may be big tax law changes in 2018 and beyond, but the law and tax changes for 2017 were minor with the exception of a new law for persons receiving certain benefits.  Below is a brief update of changes that affect us and our families.

ABLE Accounts.  ABLE stands for “Achieving a Better Life Experience”.  PA’s ABLE program went into effect in 2017.  ABLE accounts allow persons receiving benefits, such as SSI or medical assistance, to have control and access to more than the $2,000 SSI limit without losing their much needed benefits.  The ABLE account can be controlled by the person receiving benefits, rather than a trustee or guardian.  Up to $14,000 can be put in an account each year by the recipient of the benefits or by loved ones up to the maximum amount of $511,758.  There are a number of restrictions to an ABLE account so it often is beneficial to have a Special Needs Trust as well to provide for persons who will not be able to or are not able to provide fully for themselves due to disabilities, medical needs and challenges.

 Annual Gift Exclusion.  The amount of the “no need to report to the IRS” gift tax exclusion remains at $14,000 per person this year for the third year in a row.  Many people make annual monetary gifts to their family members, especially at year-end.  These gifts can be made to anyone as long as they don’t exceed $14,000 per calendar year.  Multiple gifts can be made if someone has the resources, i.e., Mom and Dad each could give each of their 3 children $14,000, meaning each of their children could receive $28,000 each calendar year. The giver of the gift does not need to notify the IRS or pay any gift tax on the $14,000 gift. The recipients of the gifts do not declare or pay tax on the gifts since they did not earn the money. 

Federal Estate Tax Exemption.   The Federal Estate Tax Exemption increases slightly each year.  This year the exemption increased to $5,490,000 per person or $10,980,000 for married persons.  Obviously only persons with substantial wealth are impacted by this tax, an estimated .02% of the population, but for those persons, knowing this number assists with their estate planning and tax planning.

 Higher Standards for Financial Professionals.  In 2016, the Labor Department issued a new rule requiring financial professions to put their clients’ interests over the financial professionals’ own financial interest when dealing with retirement savings.  The new rule was supposed to go into effect in 2017 but lawsuits were filed to prevent the new rule from being implemented.  At the time of writing this article, the rule was on hold.

If you have changes to your health, finances, living arrangements or families, it is wise to have your estate planning situation and documents reviewed to ensure they still meet your needs.  If there are no changes, we recommend you review your documents every five years to make sure they are up-to-date with any law changes.

Jan L Brown and Associates is a law firm founded in 1993 to help families. The firm has over 49 years of combined experience and practices exclusively in the areas of estate planning, probate and elder law. Estate planning includes Wills, Powers of Attorneys, Living Wills, Trusts, Tax Planning, Special Needs Trusts and Guardianships. Elder law addresses the legal issues of seniors, their families and those who care for them including obtaining benefits, such as Medicare, Medicaid and VA benefits and protecting assets from nursing home care costs. The information presented is for educational purposes only and should not be taken as legal advice as every client and situation is different and requires specific review and analysis. If you would like an appointment, please call (717) 541- 5550.