The last few years have seen significant changes to income tax and estate tax law. These changes will affect estate planning for the foreseeable future. If your estate plan is more than two years old or if your circumstances have significantly changed since your plan was implemented, you are due now for an estate plan checkup.
There is now a “permanent” federal gift, estate, and generation skipping transfer tax system. Since the early 2000s, we have been planning with uncertainty under legislation that contained expiration dates. And while “permanent” in Washington only means that this is the law until Congress decides to change it, at least we now have some certainty with which to plan.
The federal estate and gift tax exemption adjusts for inflation annually. For 2016, the exemption is $5.45 million per person and $10.9 million for a married couple.
Because only a very small percentage of Americans have a federally “taxable” estate; i.e. in excess of $5.45 million dollars, the recent tax legislation has reduced or completely removed the emphasis on estate tax planning and put it back on the real reasons we need to do estate planning: taking care of ourselves and our families the way we want.
If you are tempted to skip estate planning because your estate is less than the $5 million range, remember that estate planning isn’t just about taxes. Proper planning can:
- Avoid state inheritance/death taxes that have lower exemptions than federal taxes;
- Avoid probate, which can be quite expensive and time-consuming in some states;
- Ensure your assets are distributed the way you want;
- Protect an inheritance from irresponsible spending, a child’s creditors, and from being part of a child’s divorce proceedings;
- Provide for a loved one with special needs without losing valuable government benefits;
- See that control of your assets remains in the hands of the person you trust most;
- Provide for minor children or grandchildren;
- Help protect assets from creditors and frivolous lawsuits (especially important for professionals);
- Protect you, your family and your assets in the event of incapacity; and
- Help you create meaningful charitable gifts.
Our office can help you achieve whatever estate planning goals that are most important to you and your loved ones. Give us a call today to get started.