What are some takeaways from National Estate Planning Week?

On behalf of Scaringi Law posted in Estate Planning on Friday, October 23, 2015.

As we approach the end of National Estate Planning Awareness Week, several issues should be highlighted.

First, the good news is that the generous federal estate tax exclusion remains in place, and has even risen slightly. By one commentator's estimate, only 0.12 percent of all estates across the country will have to pay federal estate tax. The portability provision also remains in place, allowing a surviving spouse to utilize any unused exclusion amount from his or her former spouse. In addition, the maximum estate tax rate is capped at 40 percent.

The marital deduction continues to be unlimited, meaning that a surviving spouse can inherit an unlimited amount of assets from his or her former spouse without incurring any federal estate tax. However, this should not be used as an excuse for avoiding the topic of estate planning.

Specifically, spouses need to plan for multiple scenarios when creating an estate plan. If both spouses were to pass at the same time, as in a car accident, a plan for transferring assets to relatives and loved ones needs to be in place to avoid the application of state intestacy laws.

In addition, there are tax-saving strategies for high-asset estates. For example, annual gifts during one's lifetime to loved ones can reduce the total value of one's estate without triggering the federal estate tax exemption. The same is true for gifts in the form of payments for school tuition or medical bills. However, such payments must be made directly to the hospital or school. For individuals still concerned about reducing the value of their estate, an irrevocable life insurance trust might be an additional option.

Source: Accounting Today, "CPA Estate Planning Tips for National Estate Planning Awareness Week," Fred Slater and Ellen Minkow, Oct. 19, 2015


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