In 2018, the IRS Statistics of Income predicts that 2.71 million Americans will pass away, and 99.9% of them won't owe Federal estate taxes. In fact, less than 1-in-10,000 estates will have to pay estate taxes - all due to Trump's 2017 new tax law that increased the basic exclusion amount to $11.18 million for each individual. While fewer estate tax returns will be filed, it's expected that the new law will drive more and more wealthy persons to make lifetime transfers of property - thus increasing the need to file gift tax returns.
Even though few persons must concern themselves with federal and state transfer taxes in 2018, the need for estate planning to administer and transfer their wealth remains important - possibly more so now. Consider the following non-tax and tax reasons to prepare an estate plan or review your current estate planning documents:
· Avoidance of the time and expense of probate administration and maintenance of privacy in family financial matters
· Provide for management of your assets and your healthcare in the event of incapacity
· Appointment of appropriate representatives to care for minor children
· Manage significant family business, investment and personal assets
· Provide for family members with special health, education and support needs
· Business succession planning
· Review of estate plans developed under prior law, to take advantage of the higher exclusion amounts
· Review of trusts previously established on the death of a spouse and other irrevocable trusts created under prior tax laws, to take advantage of the current estate and gift tax laws
· As enacted, the changes to the estate and gift tax provisions of the Internal Revenue Code expire after 2025 - with no certainty that they will be extend or not rolled back
An attorney can provide guidance to better ensure your family, business and social goals are achieved through estate planning. The absence of a "taxable estate" does not negate the importance of estate planning.