"Wrap" Up Your Affairs: 2020 Year-End Estate Plan Review

Estate Plan

We are all so eager for 2020 to conclude! However, year-end is a terrific time to review previously completed estate plans or to finish one if the year has run away from you, as it has for so many of us this difficult year.

Evaluate & Adapt

Assets and family dynamics change over time. The holidays are a great time to evaluate and update any real property and gifts that you might have received throughout the year. The interactions and composition of many households have changed in 2020 because of the pandemic. Several of our clients have households that now accommodate the needs of adult children returning from college, an elderly family member, a spouse working from home, or young children attending school remotely. Some moved to be closer to family and others relocated to be further away from family!

Another issue to consider is estate planning laws that have changed in 2020 or will change in early 2021. For instance, the SECURE ACT significantly changed the laws for inherited IRAs (i.e., changes the timing of distributions from your 401(k) plans and Traditional IRAs to your beneficiary upon your death). California's Proposition 19, which some say was constructed with multiple facets in order to pass, has key provisions that may impact property tax exclusions for inherited real property.

On the taxation side, the IRS has several new inflation adjustments for 2021.

It is important to monitor these types of changes and how they may affect your current estate planning documents, so it is critical to work with your accountant and attorney in this process.

Implement & Communicate

Your estate plan includes Healthcare and Financial powers of attorney (POAs). These are critical documents that are necessary to manage your affairs if you become sick or incapacitated. COVID-19 has forced many of us to reconsider whom to have as a Healthcare POA. For example, does it really make sense to have a sister who lives across the country act as your Healthcare POA? Perhaps, a trusted relative or friend that lives closer to you might be a more appropriate choice; especially given how skittish many of us are about the safety of travel during the pandemic.

Equally important is to make sure that your trusted loved ones know where your important documents are kept and your wishes should you become incapacitated or pass. Your documents should include names and contact information for your accountant, doctors, attorney and other key advisors. Also, make sure that passwords to your electronic accounts are known by your POAs. Be as specific as possible about your personal property bequests, as doing so will avoid jilted feelings, confusion, and unnecessary competition amongst your beneficiaries.

Other Considerations for 2021

The "small estate threshold" in California will remain at $166,250 for 2021. Estates above that amount will need to go through the probate process, if standard estate planning measures have not been enacted. The basic applicable exclusion amount (and generation-skipping tax exemption) in 2021 will be $11.7 million, up from $11.58 million. Married couples will potentially be able to shield a total of $23.4 million. The annual gift tax exclusion will remain at $15,000 for 2021, but the annual gift tax exclusion for a non-citizen spouse will increase to $159,000, up from $157,000 in 2020.

The basic salary deferral amount for a 401(k) and similar workplace plans remains flat at $19,500 for 2021, and the $6,500 catch-up amount if you are age 50 or older also remains the same. The amount you can contribute to an Individual Retirement Account (IRA) stays the same for 2021 at $6,000, with an additional $1,000 catch-up limit if you are age 50 or older.

Need Help?

We are all available to serve you with your estate planning, conservatorships and probate & litigation requirements. While several of our personnel are working remotely, our Irvine Office is available on an appointment basis, so please contact us with your questions.


All of us at Mortensen & Reinheimer, PC want to take this opportunity to wish each of you our warmest holiday greetings and best for a healthy 2021!

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