In 2010, Congress passed a sweeping legislation called the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This legislation in addition to fixing loopholes in insurance laws and creating jobs to fix our faltering economy, was intended to shore up inheritance tax issues. It has given Colorado estate planning attorneys a big headache.
Specifically, a law adding “portability” of the lifetime exclusion amount between spouses, and the raising of the tax exemption ceiling to $5 million has given a lot of people a sense of comfort that when they die, their spouses will be taken care of. Moreover, many people have begun to feel in the wake of this legislation that estate planning is an obsolete idea, no longer necessary, and that credit shelters such as wills and trusts are no longer necessary.
There are many reasons why this false sense of security regarding estate planning could end up being very bad for those who aren’t paying close attention. There are all manner of pitfalls involved with not planning for the days when you are no longer around, and it’s always better to be safe than sorry. Even with the tax exemption in place, it’s possible that the extra money you leave could be lost if you don’t make proper provisions. Also, a little known fact is that this tax exemption stands to go away in 2012. What happens then? If you haven’t planned for that eventuality, your loved ones could face real problems when you die.
The truth is, no matter what laws are passed to make it easier for the deceased to pass on their financial legacy to their heirs, it’s still important to plan for that eventuality. Laws change all the time, and a good estate plan will cover you always.