By Sarah Stewart Legal Group
One of the biggest current national headlines is the political discussion regarding changing tax laws and abolishing estate (“Death”) taxes at a Federal level. Though such a repeal can be beneficial to high income families, don’t fall into the trap of believing an estate tax repeal means you do not need to plan for your estate.
Today, we discuss 3 reasons to make an estate plan, regardless of a Federal estate tax repeal.
(1) You Want to Choose Who Gets What
If you want to choose who gets your assets when you die, you need an estate plan. Abolishing estate taxes will not change local laws that direct who gets what when someone dies without a plan in place. If you don’t decide, the government will.
If you have a blended, or complicated, family situation, it is even more important to get an estate plan in place. Families where parents have more than one marriage are well known for having conflicts when the parent dies. We can all recall cases like Anna Nicole Smith and her battle to access her late husband’s assets. Putting a strong plan into place can help alleviate problems, and fights, for your family in the future.
(2) Your State May Have Estate Taxes
Getting rid of the Federal Estate Tax will not ensure estate taxes will be gone nationally. Each state makes their own laws for estate taxes. Often, states that do have estate taxes have a much lower exemption amount than the Federal law. In Oklahoma, we have not had an estate tax for years, but if you own property in other states, you may be subject to a state estate tax after your death.
The District of Columbia and 14 other states have estate taxes. At least 6 states tax recipients of gifts under an inheritance tax. Be sure to check the local laws of the states you have property in to decide if you will need a plan for estate taxes.
(3) Planning for Federal Taxes
Estate taxes are not the only Federal tax concerns of families whose loved one has died. Repealing the tax will not do away with other federal taxes such as the capital gains tax and the taxes on heirs who receive inheritances. You will still need to be aware of your potential tax liability and how to minimize your liability.
If the estate tax repeal passes, it will help simplify Federal taxes for some U.S. families. However, the repeal is not an excuse to skip estate planning. Every family needs to make a plan for their deaths. Plans alleviate the stress and heartache your family will have after your death and gives you the power to decide for yourself how your well-earned money will be split.
Reach out to professionals to help you plan for your family today!