The Clarity Formula® Estate Planning

February 22, 2022

February has long been a month associated with love. This makes it a great time to show how much you care about the people you love by creating an estate plan. If you already have an estate plan in place, now is an opportune time to check in on your plan to ensure it still meets your needs and desires.

Estate planning can alleviate stress for you and your loved ones by helping to protect your legacy in the manner you desire, provide for your dependents and heirs, replace uncertainty with confidence and allow your loved ones to focus on grieving and healing. The “Guide to Estate Planning” below will give you a brief highlight and help you familiarize yourself with many of the components of an estate plan.

The chart below highlights the annual changes to many of the federal estate planning limits.

Annual gifting (up to the annual gift exclusion) remains one of the most efficient ways to reduce the size of your estate. Annual gifting is advantageous for those who fear they will eventually have a taxable estate as well as those who are confident that they will not. In 2022, each individual donor can gift up to $16,000 to a donee, meaning a couple could gift up to $32,000. This can be done without the need to file a gift tax return and without reducing your lifetime gift tax exemption.

In addition to the annual gift exclusion, there are other types of gifts that do not erode one’s lifetime gift tax exemption. Tuition payments made directly to an educational institution and payments made directly to a health care provider for a person’s medical care do not constitute as gifts. Gifts of this type allow you to see the impact of your gift while you are living and can also help to significantly reduce the size of your estate.

If you have any questions that pertain to your specific situation, please do not hesitate to contact your advisor.

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