It’s official — the Electoral College voted on December 19, 2016, essentially completing the 2016 presidential election cycle. With that bit of uncertainty behind us and a fresh year starting out, here’s what you need to know about planning your estate under the incoming Trump administration and Republican-controlled Congress.
If you’re like most folks, you use a variety of insurance products to manage risk and protect you, your family, and your assets from losses caused by property damage, businesses, property, accidents, disability, retirement, and death. However, instead of considering these insurances as separate items, we suggest you make them part of an integrated, overall risk management plan.
We see tragedy on a day-to-day basis because good, caring folks make these horrid estate planning mistakes regularly. Will you?
1. Not having a plan. Every state has laws for distributing the property of someone who dies without an estate plan—but not very many people would be pleased with the results.
A recent study conducted by Texas Tech University concluded that the ability to make smart financial decisions peaks at age 50. This decline was observed in both men and women, making both sexes equally vulnerable to financial fraud as they age. (more…)
Death taxes are back in the news at the federal level as well as in Delaware and Minnesota.
What Happened to the Death Tax Repeal Act of 2015?
Back in February and March of 2015, identical bills calling for repeal of the federal estate tax and generation-skipping transfer tax were introduced in the U.S. House and Senate. In April 2015 the U.S. House passed the “Death Tax Repeal Act of 2015” by a margin of 240 to 179. While the votes were largely along party lines (233 Republicans voted for the bill, while 176 Democrats voted against it), seven Democrats ended up supporting the bill.
In spite of the Republicans’ majority in the U.S. Senate – there are currently 54 Republicans, 44 Democrats, and two Independents – the bill has stalled there. Why? Because Democrats have signaled that they will filibuster the bill, which means that at least 60 senators need to be in favor of repeal in order to overcome the filibuster. Since the two independents – Sen. Angus King (ME) and Sen. Bernie Sanders (VT), who is actually running for U.S. President as a Democrat – caucus with the Democrats, Republicans will need six Democrats to change their minds and vote for repeal. That’s a lot. And even on the slim chance that this would happen, President Obama has repeatedly expressed his support of the estate tax and would undoubtedly veto the repeal bill if it ever came across his desk.
What’s Going On With Death Taxes in Delaware and Minnesota?
Delaware enacted an estate tax in 2009 with a $3,500,000 exemption. Since then Delaware’s estate tax exemption has been indexed for inflation so that each year it matches the federal exemption. Thus, in 2014 Delaware’s exemption was $5,340,000, and with a small population and such a high exemption, the state only brought in an insignificant $1,300,000 in estate tax revenues. This has prompted the introduction of legislation to eliminate Delaware’s estate tax effective July 1.
Meanwhile, just last year Minnesota legislators tweaked their state’s estate tax laws by increasing the exemption from $1,000,000 to $1,200,000 and then increasing it in $200,000 increments on an annual basis so that it reaches $2,000,000 by 2018. But apparently this was not enough because in May 2015 a bill was introduced that will increase Minnesota’s exemption to $5,000,000 by 2018, after which it will be indexed for inflation so that it matches the federal exemption.
Where Do We Go From Here?
Will any of these estate tax bills become law? Only time will tell. One thing is certain though – legislative changes can affect your estate plan and your estate tax bill. Please stay tuned as our firm continues to monitor both federal and state legislation that may affect your estate plan and your estate tax bill.
Estate planning for couples in a second or later marriage who have disproportionate estates can be tricky. One solution for allowing the well-to-do spouse to maintain control of their assets but keep their other half happy is the Lifetime QTIP Trust. (more…)
All too often, estate planning is viewed as a transaction: a will, a living trust, powers of attorney, etc. But the best planning happens when the professional can get to know the client on a deeper level, to uncover hopes, dreams and aspirations. It becomes more about family and values, and it becomes a process instead of a transaction. (more…)
After a loved one dies, you need to gather the important documents that are necessary to settle their final affairs. While the documents required will vary depending on what your loved one owned and owed, below is a list of common documents you will need to find: