Estate planning is about much more than avoiding estate taxes
When it comes to the subject of estate planning, many discussions involve estate tax considerations and advice on how to avoid them. The truth is that a large percentage of people who read our Pennsylvania law blog would not need to worry about estate taxes today.
Data from the Tax Policy Center showed that in 2011 only approximately 3,300 estates across the entire nation would have broken that year's $5 million exemption threshold and been subject to federal estate taxes.
A few thousand estates boils down to "the ultra wealthy." People who fall under the category of middle class often disregard the need for estate planning because they know their likelihood of having a $5 million estate is small. This is a mistake. The benefits, nay the need, for proper estate planning extends well beyond avoiding estate taxes.
Why is it so important for everyone to have an estate plan? The reasons are many, but we will start this two-post conversation with the topic of estate taxes.
Today, few estates would be subject to estate taxes under current laws, but what about tomorrow? How about in five or 10 years? The exemption amount has changed several times in the past couple decades. You can expect it will change again in the future.
Estate tax, as noted above, is only one factor to consider in estate planning. A proper estate plan considers asset distribution, guardianship of minor children or health care decision, among other issues. We will discuss these in greater detail in the next post in this series.
Source: Insurance News Net, "Back to the Basics of Estate Planning: Reexamining Estate Planning Needs, Regardless of Wealth," Victor Ngai, March 26, 2015