Your Old Estate Plan Could Cost You a Fortune at Tax Time
Estates Valued Over $5.7 Million Should Have A Cost-Basis Review
Recently, many of the high net worth estate plans I’ve reviewed for clients with higher net worth have been outdated in costly ways. These are people with estates somewhere over $5.7 million. The most common reason is that they planned when the gift tax credit was lower and have not revisited the issue since then. If you have not had your will or trust looked at since 2010 you really should. Back when their “coupon” against estate taxes was a million dollars or less, they were told to divide assets and at the death of the first spouse, to have half of their stuff, or more, transferred to an Irrevocable Trust.
Worse still, many were told to make transfers to an Irrevocable Trust right away. I have even had people come to me after receiving this advice and acting on it in 2018, to protect property from a potential creditor, transfer the (highly appreciated) assets to the next generation – as in, deeding over valuable real estate to their kids. This was done without any capital gains tax analysis.
Unfortunately, this advice and these old Irrevocable Trusts, and many of the old Will-based estate plans that people still have will end up costing them much more in taxes. Why? Because the law changed. Also, because the advice they got, did not consider an analysis of cost basis.
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