Planning for the Future (Without a Crystal Ball)

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crystalball 91024Creating a will, trust, or any type of estate plan has always involved dealing with an uncertain future. Consider that just 20 years ago in 1997, the estate tax had an astonishing 55% rate with only a $600,000 exemption. Because of the low exemption and high rate back then, tax-driven estate planning was a mathematical necessity for a large segment of the population.

Fast forward to 2017. Not only do we now have a generous $5.49 million exemption and a lower 40% rate, we also have renewed emphasis and action from the President and Congress on repealing the estate tax, as evidenced by the September 27, 2017 Unified Framework for Fixing Our Broken Tax Code. So what does this mean for you, as you’re planning for the future?

Estate Tax Repeal Means No Need to Plan…Right?
Nothing could be further from the truth! Although there was a lot of tax-driven planning in the past, in recent years estate planning has largely focused on preserving family unity, protecting assets, ensuring privacy, and effectively passing along financial and emotional legacies.

And, for those with high net worth, it’s also worth mentioning that estate tax repeal isn’t a foregone conclusion at this point either. The Unified Framework still must be crafted into legislation that and pass both houses of Congress before being signed by the President. Given the political division the country faces (and the likely stiff opposition to the President’s tax proposal from Congressional Democrats), this will be no small feat.

Today, the focus of estate planning has shifted away from death taxes to other concerns that affect most families. Good estate planners now work with clients to protect their families against costly, public probate, guardianship, or conservatorship court proceedings and also further their legacy goals.

You might be worried about some of these things happening to your family:

● A financially irresponsible child or grandchild wasting their inheritance simply because they lack the financial maturity to handle wealth.
● A divorcing spouse of one of your heirs taking advantage of family wealth.
● Family discord lurking under the surface that tears your family apart, especially after the death of the patriarch or matriarch.
● A lawsuit, judgment, or bankruptcy that causes your family to lose their inheritance.
● Alzheimer’s or another cognitive impairment affecting you or someone else in your family.

Luckily, we have well-developed, flexible legal strategies (such as lifetime asset protection trusts, standby special needs trusts, and robust incapacity planning, to name a few) for overcoming these issues. Although estate planning can’t necessarily repair a damaged family relationship, proper planning can help make sure it does not get any worse. But these strategies only work when you implement or refresh your will, trust, and estate plan.

So, there’s no crystal ball. Where should I go from here?
According to WealthCounsel’s 2016 Estate Planning Literacy Survey, about 74% of Americans find estate planning to be a confusing topic. So, you’re not alone if you’re unsure about your next steps.

If you don’t yet have a will or trust, now is the time to explore getting one. If you have an “old” will or trust, now is the time to talk with us about whether you need an update. Modern families need modern estate planning solutions, and we are ready to help you create a flexible estate plan that works now, and will work in the future, even if the current tax laws change (even though no one has the proverbial crystal ball).

Dedicated to building your wealth, empowering your family and securing your legacy,

Marc Garlett 91024