In recent years, the amount that can be left to loved ones without having to pay the so-called “death tax” has risen to levels most Americans will never reach. For example, in 2018, the estate tax, which is often referred to as the “death tax” does not apply to persons who die this year with less than $11.18 million dollars. For married couples, effective planning can double that amount.
This rise in the estate tax exemption has led many to wrongly conclude that estate planning is no longer necessary. In fact, for many folks, the reasons for good estate planning have nothing to due with tax avoidance. For example, other estate planning considerations include:
- Planning for second spouses and the children from a first marriage
- Protecting assets for a spouse and children from a bimbo or cabana boy
- Providing for disabled beneficiaries with special needs
- Protecting assets from a spendthrift beneficiary
- Paying for long term care
- Avoiding probate
- Planning for your incapacity (i.e. disability)
- Providing for your beloved pets
- Carrying out your charitable intent
- Protecting assets for an alcoholic, drug addicted, or gambling addicted beneficiary
- Protecting assets from a beneficiary’s divorcing spouse (you never know when the in-law will become an out-law)
- Protecting assets from a beneficiary’s bankruptcy, malpractice suit, business failure, medical crisis or other lawsuits
- Naming guardians for your minor children to care for your children and make decisions on their behalf during your lifetime and after you die
- Authorizing first responders to stay with your minor children in the event of an emergency until named guardians can arrive (this avoids your children being taken into foster care)
- Making end of life decisions (e.g., with an advance health care directive)
- Being an organ donor to save up to 8 lives
- Naming successor trustees, agents, guardians, and caretakers in case your first choice is unable or unwilling to serve (this avoids court involvement and better ensures your wishes will be carried out)
- Passing on family traditions
- Honoring grandchildren with family heirlooms or special gifts
- Leaving funeral instructions
- Leaving love letters for your family
- Removing as much burden as possible from the shoulders of your loved ones
If even one of these considerations is important to you, you should consult with an experienced and qualified estate planning attorney to discuss how a comprehensive estate plan can protect you and your loved ones from these and other issues.
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