Estate Planning and New Tax Bill
Estate Planning
Estate Planning and New Tax Bill
There is never a good time to die. In fact, if the fountain of youth existed, most of us would drink from it ensuring our eternal existence. But, if we must die, the next 7 years would be a pretty good time.
Why, you might ask?
When Congress passed the Tax Cuts and Jobs Act of 2017 on December 15, 2017, they doubled the estate tax exemption from $5.6 million to $11.2 million. The estate tax exemption is the gross value of an inheritance that an individual can leave for his or her heirs. Couples dying between now and 2025 can leave their beneficiaries twice as much, without having to pay an estate tax. The news is even better considering that the gift tax and generation-skipping tax also increased along with the estate tax. This means that individuals and couples can give away up to their respective exemption amounts, during life and/or to their grandchildren, without needing any advanced planning. The annual gift exemption, which is separate from the estate tax exemption, also increased to $15,000 per individual, per beneficiary. Couples can therefore gift, during their lifetime, up to $30,000 per beneficiary, without reducing their estate tax exemption, all the while reducing the size of their taxable estate. According to the 2017 Joint Committee on Taxation report on “The Taxation of Individuals and Families”, in 2013, the last year when final numbers were available, only one-fifth of one percent of the deaths were subject to estate taxes. In 2013, the individual estate tax exemption was $5,250,000. At $11,200,000, we will see an unprecedented change for gifting, during life and in death, for Americans. In the next 7 years, we will see massive transfers of wealth, from one generation to the next, without the government seeing a penny in estate and gift tax.If the estate tax exemption is so high, why would anyone need estate planning?
If you answered "right" to any of the above questions, then you also answered why estate planning is still necessary. Estate planning goes beyond estate taxes and to the heart of protecting what's most important to you — your family's legacy, their goals and dreams. It affords you a process by which you can reduce or even eliminate conflict within your family after you're gone.“You want your children to be able to attend college, even if you are unavailable to make it happen, right?”
“You don’t want your 10-year-old son inheriting that $5-million life insurance policy, right?”
“If you bought your home before your marriage, you don’t want it to go to your spouse’s children from a prior marriage after you’ve passed away, right?”
“You don't want your children fighting over who should "pull the plug" or who gets Mom's 1.5 carat diamond wedding ring, right?”
That's all worth protecting, right?
So, even though an anticipated estate tax bill is not an issue for you and your family, there are many unique family circumstances that would warrant a sit-down with an experienced estate planning attorney.About the Law Office of Jan A. Meyer The Law Office of Jan A. Meyer was founded in 2011 in Dana Point, California. It was established to provide clients with committed and compassionate estate planning services to assist with asset protection and strategic goals. Our law firm provides a personalized and cost-effective alternative to large law firms or self-guided online forms. At the Law Office of Jan A. Meyer, families and individuals are guided through a series of decisions to build a plan that ensures their financial and personal legacy are protected when they are no longer able to care for it. Learn more at www.danapointwills.com.
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