The New York Times published a good article yesterday laying out what I’ve been telling everyone lately — that it’s time for everyone to reevaluate their estate plan. In Smaller Though It May Be, It’s Time to Look at the Estate NYT writer Paul Sullivan states:
But estate planning is not primarily about avoiding a tax that few have been subject to since it was instituted in 1916. The primary goal has always been how to bequeath what you have to the heirs you picked. And if handled wrongly, wills can become a vehicle that destroys families.
The most important points that I hope people take from this article are that:
- The Estate Tax is here to stay. Virtually every Estate Planning attorney will tell you that repeal, fought so hard for by Republicans is dead.
- The “exemption,” that is the amount a person can die owning before being subject to the estate tax is currently $3.5 million, and probably will be at least that amount in the future.
- Over the past two years, many people who are (or were) subject to the Estate Tax lost a substantial amount of their wealth. Not only that, their successful adult children, who didn’t necessarily need an inheritance from their parents have also lost a substantial amount of wealth. I’ve heard anecdotal evidence that sales and rentals of this movie have skyrocketed (just kidding).
Those three above factors result in many estate plans being very problematic. They may have been perfect when drafted. The problem is the attorney who drafted it did not anticipate the fundamental change in the economy. No one did.