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Eastman & Smith Alert - Has Congress Made Estate Planning Unnecessary?
2/1/11
The tax bill passed by Congress in December 2010 increased the estate tax exemption to $5,000,000 for two years and introduced portability of the exemption for married couples. As a result, individuals may be tempted to conclude that they do not need estate planning, at least not yet.
However, even from a tax standpoint, the 2010 changes are not a panacea, for the following reasons:
- the changes are for 2011 and 2012 only and may or may not be extended beyond that,
- the portable exemption does not shelter any growth of assets between the first and second deaths, and
- the Ohio exemption (which is only $338,333) is not portable, and wasting the exemption of the first spouse to die can result in $25,000 or more in Ohio estate tax at the second death.
- insuring that the desired individuals will inherit, regardless of the order in which the beneficiaries die, or perhaps regardless of the remarriage of a surviving spouse,
- avoiding the need for a court-established and court-supervised guardianship that would otherwise be required when assets are left to a minor child,
- protecting against the misuse of an inheritance by a beneficiary who is too young and/or immature,
- preserving government benefits for a special needs child,
- avoiding probate in order to reduce legal fees and provide privacy, and, perhaps most important of all,
- avoiding family conflict.
Given the above, estate planning is not just for the wealthy -- it is needed by anyone who has assets and wants them to be put to the best use in the event of death or disability.
