Planning Your Estate If Federal Estate Taxes Won’t Affect You

There is a strong possibility that Congress will enact important estate tax changes before this fall’s elections. One proposal has been to make permanent the estate tax rules that are due to take effect in 2009, which include an exemption of $3.5 million and a tax rate of 45% above the $3.5 million sheltered amount. With proper planning, married couples could leave up to $7 million free of estate tax.

Even without those changes, more than 99% of Americans remain unaffected by federal estate taxes. Does that mean most people no longer need estate planning? The answer should be obvious: Estate planning has always been more than just tax planning, and there are many goals and objectives that your estate plan can and should accomplish. Most individuals, if they reflected on the matter, would tell their advisers they would like an estate plan that achieves some or all of the following:

• First of all, I want to provide fully for the economic security of my surviving spouse (assuming a spouse is in the picture);
• Next, I want to ensure that family members or others who depend on me financially are properly supported and cared for – especially those who are disabled or have special needs;
• I want to minimize any disappointment, family conflict or hurt feelings that might arise from the distribution of my estate;
• I would like to keep the cost of estate administration to an absolute minimum, with more of my assets going to family and charities and less to “estate shrinkage";
• I would like to leave the world a better place, and pass on what I’ve learned in life to the next generation.

Some people also have special situations that need to be addressed, such as the transition of a family business, or arranging for the care disabled beneficiaries, or even their pets. And many would be pleased if the foregoing goals and objectives could be accomplished in the context of a plan that culminates in significant support for worthwhile causes and organizations.

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Copyright © 2008 by R&R Newkirk. All rights reserved.