Monthly Archives: August 2019

Your Estate Plan is Not a Slow Cooker (don’t set it and forget it)

Posted on by

One of the cardinal sins of estate planning is to “set and forget” your estate plan. Estate plans are not one size fits all, and should be reviewed and updated as circumstances change.

A common example is a married couple who implement an estate plan upon the birth of a child. They most likely appoint guardians for their minor child, and name close friends or family members (perhaps their parents or a sibling) as personal representative or trustee. Twenty years go by, and the couple fails to revisit their estate plan. Now, that child is no longer a minor, individuals named as personal representative or trustee may be deceased or no longer willing and able to serve, and our couple may no longer be married to each other! While Wisconsin law automatically revokes most dispositions of property and fiduciary designations in favor of a former spouse upon dissolution of marriage, it cannot create a completely new estate plan out of thin air.

Another example is an unmarried individual with no children who leaves his or her estate to a parent. If that unmarried individual later marries and has children, failure to update his or her preexisting estate plan and/or beneficiary designations may effectively disinherit said spouse and children. As with divorce, there are Wisconsin statutes intended to avoid this (presumably) unintentional result, but they are not a catch all and should not be relied upon to reform an out-of-date estate plan.

The moral of the story is that while you can “set it and forget it” with your Ronco® rotisserie oven or Crock-Pot® slow cooker, you should not do this with your estate plan. Creating an estate plan is only the beginning; your plan should be reviewed and updated periodically, especially after significant life events such as births, deaths, and divorces.

If you have any questions on this topic, please contact Lin Law LLC (920) 393-1190.

Yet Another Estate, Gift, and Generation Skipping Transfer Tax Senate Bill

Posted on by

In an earlier post, “Dueling Estate, Gift, and Generation Skipping Transfer Tax Senate Bills,” we discussed two different Senate bills concerning the federal estate, gift, and generation skipping transfer (GST) tax rates and exemption amounts.  On June 25, 2019, Senator Chris Van Hollen (D-Md) introduced yet another bill, the “Strengthen Social Security by Taxing Dynastic Wealth Act.”  This bill would simultaneously reduce the federal estate, gift, and GST lifetime exemption amounts while increasing the applicable federal estate, gift, and GST tax rates.

The bill would reduce the lifetime exemption amounts to a basic estate tax and GST tax exemption of $3.5 million (the exemption amount in effect in 2009) and a gift tax exemption amount of $1 million.  Notably, this would appear to “de-unify” the gift tax exemption from the estate and GST tax exemption amounts.  In addition, the bill would increase the maximum estate tax rate from 40% to 45%.  Finally, the bill would divert estate tax revenue to the Social Security Trust Fund in an attempt to bolster the program’s depleted reserves.  The projected revenue generated by the bill would cover approximately one-fifth (1/5) of Social Security’s estimated long-term funding gap.

Like the previous two bills, this one is unlikely to become law.  However, the number of bills introduced in the last year should remind us that the applicable exemption and exclusion amounts are always subject to change, and that it’s important to periodically review your estate plan with the current exemption amount in mind.

If you have any questions on this topic, please contact Lin Law LLC at (920) 393-1190.