Many thoughts and concerns go into planning for the future. When drafting an estate plan, many individuals in California and elsewhere are concerned about how taxes will impact their estate plan. However, when U.S. laws change, this could alter how individuals act when drafting an estate plan, what is included in the plan and whether they draft an estate plan early in life or not.
In response to the expected tax reform, those working in the estate planning industry were surveyed on how they expected these changes would affect their practices. The Tax Cuts and Jobs Act intends to double estate and gift tax exemptions. However, most of those surveyed did believe that these changes would affect them. Roughly 70 percent stated that they represented clients with a net worth of less than $25 million.
Of those surveyed, only 26.2 percent expected to have less work as a result of these changes. On the other hand, 56.6 percent expected to remain the same, having little to no impact by these changes. The major reasoning for these responses is the fact that practitioners do not believe that the tax exemption will last very long, and they do not see the changes to estate tax and gift tax to remain permanent.
While those working in the tax industry might experience changes in their work because of these bills, it is expected that estate litigation and estate planning will remain steady, despite these changes. What these changes mean for those seeking to draft an estate plan or modify a current one is whether these changes impact them and how their estate plan will look.
Those going through the estate planning process should understand how best to meet their goals and protect their best interests. This also means understanding how current laws will impact their estate plan now or in the future.
Source: Wealthmanagement.com, “Will High Estate Tax Exemptions Mean Less Planning?” Susan R. Lipp, Jan. 22, 2018