Last month, Congress passed a broad tax law that included estate tax provisions increasing exemption amounts to $5 million per person. The new law, now known by an acronym that, if I write it here, will have you fleeing to another site — it’s that boring — also includes a provision that allows an individual to carry over any unused exemption to a surviving spouse. It’s called “portability” and it’s a concept that has been batted about in the estate tax legislation club (think Brentwood Country Club from Caddyshack, but stuffier) for some time.
The result of this is that married couples can exempt from federal estate tax almost $10 million between them with little-to-no formal estate planning before one of them dies.
So, the question is: Has estate planning become obsolete with the new estate tax law?
I know a lot of my colleagues, locally and nationally, seem to think so. Like Chicken Little, they swear the sky is falling and have been stockpiling canned goods for the day when their estate planning practices go belly-up.
I’m not so sure I’m following them into the bunker.
For me and my clients, estate planning isn’t just about money. Oh sure, saving taxes always one of the goals — and for folks who live in states with decoupled estate tax exemptions, like New Jersey, there are tax issues for estates as modest as $675,000 — but it’s never the only, or even most important, goal.
To understand this a little deeper, we have to agree on a definition of estate planning (from the client’s perspective):
“I want to control my property while I am alive and well.
Protect and care for me and my loved ones if I become disabled.
When I die, I want to give what I want…to whom I want…when I want them to have it…and in the way I want them to have it – all at the lowest overall cost to me and those I love.”
That’s pretty broad and it usually takes a good hour-long seminar with me for clients to fully understand and agree with that statement, but note that “tax planning” isn’t mentioned in there and the issue of money isn’t discussed until the very end.
In my experience, estate planning is as much (if not more) about family relationships as it is about money.
There are as many reasons for people to have a comprehensive estate plan as I have clients. Each walks in with a unique situation for which a tailored estate plan — one that is continuously updated and maintained — is just what the doctor ordered.
To those of you considering estate planning, if tax planning was your only goal (and you own less than $675,000) go ahead and skip it. However, if the definition I used above hits home, you should find an estate planning attorney who can help you accomplish your goals.
Posted by Victor J. Medina, Medina Law Group, LLC