The national economy, and Michigan specifically have had a difficult economic ride. Many people's portfolios are down over 50% in the last year or two. Couple this with jump in the Federal Estate Tax Exclusion amount from $2million to $3.5million and you have a drastic change in circumstances from when many people originally had their estate plans drafted by a Michigan estate planning lawyer.In light of these changes, many people could benefit from reviewing their estate plans.
First, people should look to simplify their Michigan estate plans if the Federal estate tax is of no concern. Because peoples portfolios have taken nearly 50% hits along with estate tax exemption increasing by 75%, many people who once had an estate tax concern no longer do. With Michigan estate plans that plan for the federal estate tax, surviving spouses could incur unnecessary expenses of funding and administering irrevocable trusts of the deceased. This is a prime opportunity to utilize simpler joint-trusts for married couples.
The other effect this down economy has is in regards to general bequests and gifts. Many individuals in their estate plans have made requests of specific dollar amounts going to charities or individuals. The amounts people chose when their portfolios were larger may not be appropriate any more. For example, a gift of $25,000 in an estate plan to the Humane Society would be a larger percentage of a total estate now that people's total estates have decreased so much in the past two years. This leaves less to the remainder beneficiaries.
These are two things to look for in this turbulent economic time coupled with a growing Federal Estate Tax exemption. Tomorrow we will look at other things to look for that may require an update to your Michigan estate plan.
-Christopher J. Berry, Esq.
Oakland County Wills and Trusts Lawyer
