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Are you considering some long overdue estate planning in 2016?

Now that 2016 is finally here, many people are busy implementing and adjusting to their New Year's resolutions. For instance, they may be in the early stages of quitting smoking, altering their eating habits or getting in shape.

It's important to note, however, that the New Year's resolutions of many people actually have less to do with improving their physical health and more to do with improving their financial health. To that end, they may have vowed to either update their existing estate plan or execute one for the first time.

As admirable as this is, those looking to take these steps should be aware of certain realities concerning estate planning in 2016.

Is the lifetime exclusion amount the same in 2016?

The lifetime exclusion amount is essentially the amount of money that a person can transfer to their heirs free of federal estate tax. This amount, which is adjusted annually for inflation, is set at $5.45 million for 2016, an increase of $20,000 from last year.

Experts are reminding people that while they might think that this seemingly high tax-free threshold somehow negates the need for proper estate planning, this is far from the case.

What about the estate tax rate and the annual exclusion for gifts?  

Simply put, neither the estate tax rate nor the annual exclusion amount for gifts has changed in 2016, still sitting at 40 percent and $14,000 respectively.

Is portability of the lifetime exclusion amount still an option?

For those unfamiliar with this concept, federal law has permitted surviving spouses to utilize any unclaimed portion of the aforementioned lifetime exclusion amount of their deceased spouse since 2011.

In other words, whatever portion of the lifetime exclusion amount a deceased spouse doesn't use can be added to their surviving spouse's lifetime exclusion amount.

Portability will continue in 2016 with surviving spouses able to transfer a maximum of $10.9 million ($5.45 million plus $5.45 million) to heirs free of estate tax.

If you would like to learn more about these and other important estate planning issues in 2016, consider speaking with an experienced legal professional as soon as possible.

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