by Sally M. Wagley, estate planning and elder law attorney
Everything in life changes – especially the law on estate tax.
Since I started practicing as an estate planning lawyer in Maine almost 14 years ago, estate tax laws have changed many times. This last year, 2011, has been particularly eventful:
- The federal estate and gift tax exemption increased from $3.5 million to $5 million dollars (after a very brief period during which the federal estate tax was repealed altogether).
- The Maine estate tax exemption will increase from $1 million to $2 million dollars, effective January 1, 2013.
If you are a Maine resident and have accumulated significant wealth, a simple will may not be enough. You may need an estate plan which aims to reduce or even eliminate estate tax, thus preserving what you’ve saved for the next generation or for charity. Strategies include:
- Trusts for the benefit of spouse, children, grandchildren or other family members;
- Gifts to charity, including gifts to charitable trusts;
- Bequests which skip a generation;
- Annual gifts of up to $13,000 per person to family members;
- Funding college savings plans for grandchildren.
Since the laws on estate tax change so often (and will continue to change), I like to incorporate flexibility into clients’ estate plans, enabling surviving family members to make decisions at the time of your death based on the law in effect at that time, based on the size of your estate and based on th e needs of surviving family members. An example is a will which gives your surviving spouse the ability to “disclaim” his or her inheritance from you, directing assets to one or more tax-saving trusts, if it appears at that time to be beneficial. This is just one of a number of approaches to formulating a tax-oriented estate plan.
The information provided here is for educational purposes only, and should not be construed as legal advice or an answer to a specific legal problem.
Sally M. Wagley practices in the areas of elder law, estate planning and estate administration, with the firm of Levey and Wagley, P.A. in Winthrop, Maine, www.leveyandwagley.com.