In December 2017, Congress passed a new tax bill that may affect estate planning for some people in Colorado. Even those whose estates are unaffected by the tax bill may want to review their estate plan to make sure it is still effective based on current tax law and any other changes. This could include not just changes in a person's life or assets but changes in relationships with beneficiaries or in the lives of beneficiaries.
The estate tax has been doubled, meaning that people whose estates are worth less than $11.2 million do not have to worry about estate tax. The previous limit was $5.6 million, and people whose estates were above this may have designed their plans to avoid estate tax. This may no longer be necessary. Couples might want to talk to an attorney about the portability rule and how this affects their estate. Colorado, like most states, does not have a state estate tax any longer, so people do not need to be concerned about this.
People should also make sure their documents are prepared correctly and are specific enough that a person's wishes will be carried out correctly. For example, an improperly prepared power of attorney could allow someone to change designated beneficiaries or stop financial support for a loved one. People should do these reviews every few years.
There may be additional considerations for people who are reviewing an estate plan or creating one for the first time. For example, people might want to think about whether they are still happy with the executor they have chosen or the trustee if there is a trust. People may also want to consider keeping a conversation open with family members about the estate plan and their intentions. This may be able to reduce the likelihood that the plan is misunderstood or challenged.