A recent Wall Street Journal article reminds us that the U.S. Federal estate tax turns 100 years old this year. In 1916, Congress was proactively looking for ways to boost revenue in the event that the United States would need to become involved with World War I. Hence, the death tax was born. At the time, fewer than 1% of Americans who died were impacted by the levy and, the following year, the tax amounted to less than 1% of federal revenue.
Today, due to high and rising Federal and State exemptions, most Americans (roughly 98%) will not be subject to estate taxes. (In 2015, estate tax revenues made up 0.6 percent of total federal receipts.) Of course, this could change very drastically depending on who is elected in November.
The important thing to remember is that today’s estate planning transcends taxes. It should account for a myriad of important and very personal decisions that will impact you while you’re alive and your heirs after you’re gone.
- Who will make medical and financial decisions for you in the event that you become mentally or physically incapacitated?
- To whom do you want which of your assets distributed to…and how and when do you want them distributed?
- Who will take care of and make decisions regarding your children if you’re unable or die unexpectedly?
- How will your special needs child be provided for?
- How can you protect your loved ones from the stress of probate?
The time to make these decisions is now, before it’s too late and someone else (like the government and a courtroom) makes them for you.