By Cory Howes
Creating a will, trust, or any type of estate plan has always involved dealing with an uncertain future. Consider that just 20 years ago, the estate tax had an astonishing 55% rate with only a $600,000 exemption. Back then, tax-driven estate planning was a mathematical necessity for a large segment of the population.
Fast forward to 2018. Not only do we now have a generous $11 million exemption for individuals (and $22 million for married couples), we have a lower 40% estate tax rate for assets that exceed the exemption amount. So what does this mean for you, as you’re planning for the future?
A Higher Estate Tax Exemption Means No Need to Plan… Right?
Nothing could be further from the truth. Although there was a lot of tax-driven planning in the past, estate planning has recently become more focused on preserving family unity, protecting assets, ensuring privacy, and effectively passing along financial and emotional legacies.
And, for those with high net worth, it is still important to plan for estate taxes. Moreover, if your estate plan included tax planning provisions and you are now under the exemption limits, then your plan should be adjusted to reflect the new tax law.
Today, the focus of estate planning has shifted away from death taxes to other concerns that affect most families. Estate planning attorneys can work with you to protect you and your family against costly, public probate, guardianship, or conservatorship court proceedings, and also further your legacy goals.
You might be worried about some of these things happening to your family:
- A financially irresponsible child or grandchild wasting their inheritance simply because they lack the financial maturity to handle wealth.
- A divorcing spouse of one of your heirs taking advantage of family wealth.
- Family discord lurking under the surface that tears your family apart, especially after the death of the patriarch or matriarch.
- A lawsuit, judgment, or bankruptcy that causes your family to lose their inheritance.
- Alzheimer’s or another cognitive impairment affecting you or someone else in your family.
Luckily, there are well-developed, flexible legal strategies (such as lifetime trusts, standby special needs trusts, and robust incapacity planning, to name a few) for overcoming these issues. Although estate planning can’t necessarily repair a damaged family relationship, proper planning can help make sure it doesn’t get any worse. But these strategies only work when we have a chance to work with you to implement or refresh your will, trust, and estate plan.
So, there’s no crystal ball. Where should I go from here?
According to WealthCounsel’s 2016 Estate Planning Literacy Survey, about 74% of Americans find estate planning to be a confusing topic. So, you’re not alone if you’re unsure about your next steps. We’re here to help.
If you don’t yet have a will or trust, now is the time to explore getting one. If you have an old will or trust, now is the time to talk with us about whether you need an update. Modern families need modern estate planning solutions, and we are ready to help you create a flexible estate plan that works now, and will work in the future, even if the current tax laws change (and no one has the proverbial crystal ball).