TAX REFORM IS COMING—SHOULD I DELAY MY ESTATE PLAN?

I recently heard this question: “given that Congress is going to enact tax reform, should I delay establishing my estate plan?”  The questioner reasoned that once Congress acts he would need to change his estate plan anyways.  The short answer to this question is “no.”  Get your estate plan now. 

Firstly, the tax most individuals worry about—so called “death taxes”—are not likely to change to cause more tax. Congress is considering making the tax less onerous rather than more onerous.  https://www.huffingtonpost.com/entry/tax-reform-estate-tax_us_59f0b291e4b0d094a5b68c4c.   

Secondly, death taxes affect virtually no one.  Roughly .2% of deaths in 2017 will result in a federal estate tax.  It is estimated that of the 2.7 million people who will die in the United States in 2017, only 5,500 will pay any sort of death tax.  The reason is that your estate must be roughly $5.5 million before any federal estate tax kicks in.  http://www.taxpolicycenter.org/briefing-book/how-many-people-pay-estate-tax.  Moreover, even if you currently have over 5.5 million in assets, at the time of your death, after 20 years of retirement, you will not have those assets.  The money will be spent on your living expenses. 

Lastly, and most importantly, tax planning is only a small portion of your estate plan.  The most important part of the average estate plan involves the following:

1.     Determining who will care for your minor children.

2.     Avoiding confusion created when a person is a spouse in a blended family and/or has kids from a prior relationship.

3.     Avoiding the delay and costs associated with a probate.

4.     Determining who will represent your estate at your death.

5.     Determining how you will divide your assets at death.

6.     Determining who will care for your finances when you are incapacitated. 

7.     Avoiding confusion that can be created when you fail to create an estate plan.

8.     Determining how to pay your debts at death.

9.     Keeping the “family peace” by having a well ordered estate that clearly communicates how you want your estate divided and who you want to provide for at death. 

10. Creating that peace of mind that comes with good planning. 

Of course, I am writing about Arizona law, this general information may not be right for your specific matter, and is not legal advice. I’d be happy to talk to you, so give me a call at Davis Miles McGuire Gardner, 480-733-6800, or reach me at rsewell@davismiles.com.