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Estate Planning Fundamentals and Estate Planning After the Recent Tax Law Changes

It’s very easy to get caught up in the complexities of estate planning. Often, we can miss the most fundamental planning techniques.


Let’s get the basic pieces of your estate plan in place.

1. Power of Attorney

This is typically a standard document and a term I hope many of you are already familiar with. If not, the basic break down of a Power of an Attorney is you name someone, a trusted person, to step into your shoes and act on your behalf while you’re living. This addresses situations where someone is temporarily incapacitated and are unable to attend to immediate concerns like paying bills. This role can be as narrow or as broad as you see fit, allowing for various amounts of control.

A power of attorney is crucial to have, because if something were to happen without a power of attorney named, you immediately must begin a guardianship proceeding in the courts. And until that is resolved, your situation is sitting at a standstill. Before moving forward with anything in your estate plan, this is your inexpensive and pivotal foundation piece.

2.Health Care Proxy

This role differs from the Power of Attorney as it pertains solely to a person’s health and wellbeing. This agent is named by a client to make his or her medical decisions in the event that the client is unable to.

In addition to naming an agent, this document allows you to list your wishes regarding the use of life sustaining treatments. However, it is advisable not to get too particular in this section, as the likelihood of an event occurring that matches the described circumstances so completely is slim. Then all you’ve done is prolong the situation as the doctors attempt to discern what to do next.

It may also be advised to put it into writing that you’ve discussed in person and at length, your wishes with your healthcare proxy.

3. Your Last Will & Testament

The last major component of your Estate plan is your last will & testament. In order for a will to be acted, it must first be probated. This is a process to ensure that yes, the will is really yours. However, this proceeding can be difficult and lengthy.

If we expect the probate process to be difficult, then you may want to avoid it altogether and create a similar document known as a living trust. This documented is drafted, and a trustee is named, but it is revocable and can be changed as your situation changes.

The trust can only speak to items within your trust, and therefore in order to truly circumvent the will and probate process, you need to name everything under this document. The assets in this trust will be distributed seamlessly without the intervention of the courts.

Once you have these three important documents in place, we advise our clients to review them every 3-5 years. This time frame may be altered depending on major life events (births, deaths, divorces). Regardless, changes are simple to make through the help of your lawyer.

Recent Federal Tax Law Changes & Your Estate

In the United States you can currently pass an unlimited amount of estate wealth to your spouse without experiencing estate tax (if that spouse is a US citizen). However, the issue of taxes comes into play when you are passing money onto your children.

So the real question is, how much are you allowed to pass onto your children free of estate tax?

In 2017, the estate tax exemption allowed you to pass $5.49 million to you children. But starting just over a month and a half ago we’ve had a very dramatic change on the federal tax level. The government has now said you may pass up 11.2 million dollars free of any tax, or 22.4 million for a married couple.

This change, while so dramatic, is only temporary. This is law is set to “sunset”, or disappear, at the end of 2025. And start in 2026, the laws will revert back to the 2017 estate tax exemption value.

Now this is where things can get complicated. While the federal tax exemption has risen dramatically, our New York estate tax laws were locked into the original platform that was done away with as of December 31st, 2017. And what does that mean?

Well in New York, only 5.25 million is exempt from estate tax, with only modest increases slated for the future that accommodate for the cost of living.

So how do we get around that New York exemption level?

Disclaimer trust planning.

This type of trust planning has embedded provisions which allow a surviving spouse to place specific assets under the trust by “disclaiming” ownership of them. Once the assets are the in the trust, they can no longer be taxed.

While that’s a simple definition of a complicated process, the key takeaway is that while the new tax laws will impact your estate, with the help of a good lawyer and a trusted financial advisor you can manage those estate taxes.

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Larry Heller, Not Your Average Advisor.


A CFP® (Certified Financial Planner) and a former CPA.

Has helped solve complex financial planning for 20+ yrs.

Member of Wealth Management Think Tank.

A financial advisor think tank that meets monthly to discuss investment strategies and planning opportunities.

Larry is approached regularly by the respected journals.

“Journal of Financial Planning”, and “The Wall Street Journal”.