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The new tax law has led some people to assume they can delete estate planning from their to-do lists. But that is a dangerous assumption.

Yes, the new tax law roughly doubles the federal estate-tax exemption, to about $11.2 million per person — meaning the vast majority of people will not be subject to federal estate tax.

But before you take your estate planner off speed dial, consider this: The sharp increase in the federal exemption amount means that old wills and trusts may be in urgent need of an update.

What’s more, the law opens new opportunities for estate-planning techniques to save you a bundle on income tax. And it does nothing to diminish a host of other factors that drive many people to engage in estate planning, including creditor protection, defense against financial abuse, and maximizing bequests.

Just to cement your estate planner’s job security, the new higher exemption amount sunsets at the start of 2026, when the old $5 million exemption — adjusted for inflation — reappears. And the law could be changed legislatively even sooner.

“The bad part of this big exemption is most clients are saying, ‘Gee, I don’t have to do anything. I don’t have a problem anymore,’” said Martin Shenkman, an estate planner in Fort Lee, N.J. “They’re missing what estate planning is really about.”

Review regularly

It’s always a good idea to review your estate plan regularly, regardless of legislative changes. Your net worth changes, you or your children get married or divorced, grandchildren are born — and old documents may no longer reflect your wishes.

So rather than consigning estate planning to the back burner, the new law should actually light a fire under seniors who haven’t reviewed their documents in years.

One snag that many seniors are likely to find in their estate plans is that old wills and trusts using formulas tied to the federal estate-tax exemption may now have unintended consequences. Consider this example from Colleen Carcone, director in the wealth-planning strategies group at TIAA:

Let’s say you completed your estate plan in 2001, when the federal estate-tax exemption was $675,000. The plan stipulates that the amount that can pass free from federal estate tax should go to your children and everything else to your spouse.

“That might have worked in 2001, when the kids would have gotten $675,000,” Carcone said. But now the kids will receive up to $11.2 million, and “you could unintentionally disinherit your spouse,” she said.

Revisit old trusts

When reviewing old trusts, you may find that their original purpose no longer seems compelling. Perhaps your estate plan said that at your death, your assets will pass into a “bypass” or “credit shelter” trust, which will pay income to your surviving spouse and ultimately pass assets to your children.

It was once common for married couples to set up such trusts to avoid wasting a deceased spouse’s unused estate-tax exemption. But “portability,” introduced in 2011, allows a surviving spouse’s estate to use any estate-tax exemption amount that the first-to-die spouse did not use.

What’s more, beneficiaries inheriting assets from such trusts miss out on a big tax break. When passed directly through an estate, assets such as stocks and real estate get a “step up” in basis to the market value on the day the owner died — so heirs pay tax only on appreciation after that date. Assets passed through bypass trusts don’t get the basis step-up.

When the estate-tax exemption was lower, estate-tax planning often trumped income-tax planning, Carcone said. Now, she said, “you have to look at both.”

But before you scrap these trusts, consider that they can serve many purposes beyond avoiding federal estate tax, said Bernard Krooks, founding partner of Littman Krooks LLP in New York.

Might you be subject to a state estate tax? Some state estate-tax exemption amounts are well below the federal level. Do you need the creditor protection that a trust can provide? What if you wind up in a nursing home and spend down all your assets, leaving nothing for heirs?

New ways to save on taxes

The new law also opens the door to trust strategies that provide immediate income-tax savings and asset protection while allowing you to maintain access to your money, Shenkman said.

One current focus of estate-planning lawyers: Making an end-run around the new tax law’s $10,000 annual limit on state and local income and property tax deductions.

A wealthy individual could put his house in a limited liability company, transfer interests in that LLC to multiple “non-grantor” trusts, each of which can qualify for its own $10,000 state and local tax deduction, and name his spouse as beneficiary of the trusts. The trusts can be set up in a state, such as Alaska, that has no state income tax. So the property is out of his estate, protected from creditors, and he has salvaged the property-tax deduction that was eliminated, Shenkman said.

A non-grantor trust may also be a money-saver for people who are charitably inclined, Shenkman said. Let’s say you give $10,000 a year to your church. The new tax law boosted the standard deduction to $12,000 for an individual, up from $6,350 previously, so you may get no tax benefit for those donations because you no longer itemize deductions.

But if you transfer investments into a non-grantor trust, naming your children, grandchildren and charities you wish to benefit as beneficiaries, the trust could earn $10,000 in income and give $10,000 to the church, “and you’ve got a dollar-for-dollar tax deduction, because the trust doesn’t have a standard deduction like individuals,” Shenkman said.

When updating your documents, don’t neglect durable powers of attorney. Many seniors create powers of attorney giving a trusted agent the authority to manage their finances if they become incapacitated — including the power to make financial gifts to avoid estate tax.

That gifting power may have made sense when the federal estate-tax exemption was much lower. But given today’s higher exemption, broad gift provisions should not be part of some powers of attorney, Shenkman said, because they leave seniors vulnerable to financial abuse.

If you still want your agent to have gifting powers, Shenkman said, consider reining in that authority — perhaps by restricting gift recipients to trusts that you have established.

© 2018 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.