The year 2023 was a landmark year for changes in Massachusetts’ estate tax laws. Here are 9 practical tips to navigate the new Estate Tax Landscape:
- Regular Reviews and Updates: A colleague of mine once said: “You need to review your estate plan on a regular basis; this is because ‘I change, you change, your situation changes,’ and therefore your estate plan needs to address the changes.” In October 2023 the Massachusetts Estate Tax laws changed. So, in addition to personal changes and life transitions we now have new laws that have altered the estate planning landscape significantly. Therefore, it is necessary to contact your estate planning attorney regarding your plan in particular and the changes in general.
- Work with Professionals: Another colleague of mine advised me a long time ago to create my own “round table” for each client. At that table, I take a holistic approach and seek to collaborate with other professionals for a client’s needs. These would include tax advisors, financial planners and any other person who might be helpful. I can recommend other professionals to my clients if need be.
- Consider Life Insurance Strategies: Although most people are not in love with life insurance, it can play a special role in estate planning. Many of my clients who are young have life insurance to provide funds for young children’s needs; others have such large estates that the life insurance policies they have are meant to cover estate taxes and expenses upon death, so that other assets need not be liquidated until it becomes appropriate to do so. There are also “Hybrid” life insurance policies that cover long-term care needs.
- Maximize Charitable Contributions: Many of my clients have favored charities and are already giving to charities. In those cases, we incorporate charitable giving into their plan. Charitable giving can help reduce a taxable estate while meeting philanthropic goals.
- Consider Specialty Trust Options: Some of these include Domestic Asset Protection Trusts (DPATs); Spousal Access Trusts (SLATs); Irrevocable Life Insurance Trusts (ILITS) and other planning techniques to work through income tax savings and asset protection.
- Consider Real Estate: Some clients own multiple properties; and some own them in more than one state. A very good reason for placing these assets into these trusts can be to avoid probate in multiple states or even in just one state where the properties are likely to be in different counties.
- Educate Your Beneficiaries: Often, parents hesitate to involve adult children in their estate planning. Sometimes they even do the opposite—hide all information, and then hope that at the end of the day the children will “just do their duty.” This can be a mistake. Beneficiaries need to be involved to ensure that they understand the plan, their roles and how to manage inheritance effectively. Although our world is not always transparent, transparency here will help prevent conflicts and misunderstandings!
- Technology and Estate Planning: Sometimes tech and I don’t get along! Here I welcome my paralegal’s help, and both my spouse and mature son to work through digital asset management with me. Digital assets and online accounts should be part of your planning.
- Staying Informed: This is often hard for the busy lay person. A word of advice for my clients is to consider joining our mailing list for notices about changes in the law or seminars that we offer online and in person.
Years ago, I developed a “catch-phrase” to summarize my practice goals. “Protecting your Assets, Preserving, your Legacy and Providing Peace of Mind.” I still subscribe to these thoughts. The recent Massachusetts Estate Tax Reform has made me double my efforts to notify clients and others about the ever-changing legal landscape. I urge you to be proactive, informed and engaged with professionals to ensure your estate plan will work for you!
I look forward to working through the changes in the law together with you and your family for your benefit. For more information about how recent changes might affect your estate plan. Or how you can save on estate taxes of all types, reach out to Lannik Law, LLC by calling 617-431-2669.
