7035 Campus Drive, Suite 907, Colorado Springs, CO 80920 USA

(719) 266-8172

Jackson Legal Services PC

Join us in welcoming Attorney Alicia M. Buckingham to the JLSPC Family!

Join us in welcoming Attorney Alicia M. Buckingham to the JLSPC Family!

Join us in welcoming Attorney Alicia M. Buckingham to the JLSPC Family!Join us in welcoming Attorney Alicia M. Buckingham to the JLSPC Family!


Newsletter Courtesy Of Wealth Counsel

 Rebecca is a Member of a group and resource in the Legal Community called Wealth Counsel. This Newsletter was written by Wealth Cousel.


January 2018 Newsletter

Tax Reform: Solutions For Your Clients and Their Estate Planning


In December 2017, Congress passed, and President Trump signed a sweeping tax reform bill commonly known as the Tax Cuts and Jobs Act. This new Act contains several significant changes that will impact your clients and their estate planning.


Estate Tax Changes

Starting January 1, 2018, the estate, gift, and generation-skipping transfer (GST) tax exemptions double from $5 million to $10 million (adjusted for inflation).  For 2018, the exemption is now $11.2 million per person ($22.4 million for a married couple). As was the case under prior law, the exemption will adjust annually for inflation, providing us with additional opportunities each year for clients who decide to utilize this new exemption sooner, rather than later. This doubled exemption remains in effect until December 31, 2025, at which time the law sunsets and the exemptions revert to the $5 million level (indexed for inflation).


These changes open significant opportunities to remove assets from estates and permanently exempt future appreciation of those assets from estate, gift, and GST taxation. Of course, whether tax-driven planning is appropriate for a client depends on many factors. For clients of considerable wealth, now may be the perfect time to implement strategies like a dynasty trust, a spousal lifetime access trust, a domestic asset protection trust, or a charitable remainder trust. For clients whose net worth is less than the exemption, we still must review and possibly revise prior estate plans to ensure that any “old” tax-driven language still achieves the client’s goals. For example, a client with assets of $8 million whose trust uses a formula to allocate assets may have been comfortable with a $5 million credit shelter trust and the $3M balance of their estate going into a marital trust, but may be concerned about funding their entire $8M estate into a creditor shelter trust.


Obviously, estate tax planning is only one aspect of estate planning. Incapacity issues, protecting financially imprudent heirs, asset protection, avoiding probate, and minimizing income taxes are all other aims that can be achieved with proper estate planning. Some clients may mistakenly believe that they do not need estate planning because of the increased exemption. In addition to working with your clients who are affected by the estate tax, we also welcome the opportunity to discuss the many benefits of comprehensive estate planning with any clients who still haven’t moved forward with their planning.


Changes to Individual Taxation

The Act retains a seven-bracket rate structure but changes the income level and rate for each bracket. In addition, the standard deduction has increased from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples. However, the personal exemption deduction has been repealed.

The widening of brackets, rate reductions, and increase in standard deduction are all intended to offset the repeal of the personal exemption. Congress’s intended result is lower effective income tax rates for individuals. The increase in the standard deduction will likely reduce the number of clients who itemize, so tax season in 2019 (when 2018 tax returns are filed) will probably be a little less arduous for many clients. Some good news for advisors is that since less time will need to be spent discussing what can be itemized, more time can be spent on big-picture strategies to build and protect wealth.


The capital gains rate and net investment income tax are unchanged. The top long-term capital gains rate remains at 20 percent, and the net investment income tax rate remains at 3.8 percent.


Like the changes to pass-through businesses (more below), these changes to the standard deduction, brackets, and the personal exemption are in effect from January 1, 2018, through December 31, 2025.


Pass-Through Business Changes

For business-owner clients, the reform of pass-through business taxation is likely an incredibly welcome change. This impacts sole proprietorships, partnerships, S corporations, and LLCs taxed as partnerships or S corporations. The Act provides for a 20 percent deduction for most pass-through businesses which reduces the effective top tax rate to 29.6 percent (37 percent highest bracket less the 20 percent deduction yields a 29.6 percent effective rate). Owners of some service businesses, including those in the fields of health, law, consulting, athletics, and financial services, are subject to income limitations. High-income earners engaging in those types of businesses will not receive the 20 percent deduction, but other strategies are available to help them reduce their income tax burden. Give us a call today so we can strategize with you and your high-income clients about the options.


This 20 percent deduction mentioned above is available from January 1, 2018, through December 31, 2025. We should immediately discuss the impact of this new law with any clients that are considering transitioning to or opening a new pass-through business entity. Depending on a client’s goals, the reduction in the C corporation rate (from up to 35 percent to a flat 21 percent) may also make a C corporation a potentially attractive option. Each situation is unique, and we are here to help.


Putting It All Together

The Act is perhaps the most significant tax legislation in over 30 years. Continued study and experience with the Act will undoubtedly reveal numerous tax planning opportunities. Stay tuned for more details. In the meantime, feel free to give us a call with any questions you or your clients may have about tax reform or estate planning.

1. " Tax Reform: Solutions For Your Clients And Their Estate Planning." Member.WealthCounsel.com, Wealth Counsel, Jan, 2018, https://member.wealthcounsel.com/search#?q=Newsletter%20Tax%20Reform&user=true.  

Archived Newsletters

 Wills vs. Trusts: In Plain English

Everyone has heard of wills and trusts. Most articles written on these topics, however, often presume that everyone knows the basics of these important documents. But, in reality, many of us don’t – and with good reason – as they’re rooted in complicated, centuries-old law. 

Let’s face it, if you’re not an estate planning attorney, these concepts tend to remain merely that – concepts. So, if you’re “fuzzy” about wills and trusts, know that you are not alone. After we show you the difference between these two documents, we’ll tell you why a trust is the better choice.

 Wills vs. Trusts: Defined 

Let’s take a minute and define both “will” and “trust”: A will is a written document that is signed and witnessed. A will is considered a "death" document as it only goes into effect when you die.    

A will: 

● provides for the distribution of assets owned by you, but not assets directed to others through beneficiary designations (e.g. life insurance or retirement benefits)

 ● sends assets in your individual name or payable to your estate through the probate process

 ● allows you to appoint permanent guardians for your minor children 

● names the person you wish to settle your estate (e.g. executor or personal representative)

 ● doesn’t always include protective trusts for beneficiaries and tax planning because many wills are simple 2-3 page documents 

● permits you to revoke or amend your instructions during your lifetime 

● tends to cost less than a trust on the outset but costs more to settle during court proceedings after death.


A trust is a legal document, signed and witnessed, and effective during your lifetime, during any period of disability, and after death. Because the trust is effective during your lifetime and you can change it, it’s referred to as a "living" document.  

  A trust:

● has lifetime benefits 

● provides for the distribution of your assets

 ● avoids probate if fully funded

 ● provides for a successor trustee upon your death or incapacity 

● allows for the management of your property – even if you’re incapacitated.

 ● can address appointing disability guardians for minor children 

● often includes protective trusts for beneficiaries and tax planning

 ● permits you to revoke or amend your wishes during your lifetime 

● costs more than a simple will on the outset but much less upon administration, while typically providing significantly more value.

The Probate Process: A Key Element in Deciding Between a Will and Trust 

One key element in deciding between a will and a trust is understanding the probate process. The term “probate” – which literally means “proving” – refers to the process wherein a decedent's will must be authenticated, outstanding legitimate debts paid, and assets transferred to the beneficiaries. The downside is that probate can take a long time - even years - it’s expensive in many places and the entire process is completely public, meaning your nosey neighbor Nancy and evil predator Paul both know exactly who got what and how to contact them. In virtually all cases, the only upside of probate is that creditor claims are cut off. 

 ●  Probate Guaranteed. If you use a will as your primary estate planning tool, you own property in your individual name, or property is made payable to your estate, probate is guaranteed. 

●  Probate Avoided. If you use a trust as your estate planning tool, probate is avoided - saving your family time and money. 

The Bottom Line on Wills vs. Trusts HOW TO DECIDE: 

As everyone’s situation is different, it’s important to analyze every aspect of your situation – and what the future may hold – so that you can determine what’s right for you and whether probate avoidance, incapacity planning, and trust protections have value to you and those you love. Most people receive the greatest overall benefit from having a trust. 


Without an estate plan in place, you and your family are left completely unprotected. Call our office now and we’ll help you determine whether a will or a trust makes sense for your situation. You don’t have to make these decisions alone.        

2. “Wills vs. Trusts: In Plain English.” Member.WealthCounsel.com, Wealth Counsel, 29 Feb. 2016, member.wealthcounsel.com/content/article/5831201173817534717.