Does The Estate Tax Exemption Amount Solve All My Estate’s Tax Problems?

No, the Estate Tax Exemption does not solve all of your tax problems for your estate. – First, the estate tax (death tax) exemption is not automatic and its application can be complicated.  Even if you have a small estate, documents must be filed in a timely manner in order to take advantage of it.  If your estate is exempt from the death tax, there are many other types of taxes that negatively impact your estate, your spouse, and your heirs.  There are income tax, capital gains tax, gift tax, and property tax issues just to name a few.  A quality estate plan can significantly reduce those other taxes for your spouse and children during the years following your death.  Of course the State and Federal tax laws are always changing.  Just because you qualify for an exemption this year, can you be sure you will qualify for an exemption (or that there will even be one) the year you die?  Only the law in effect the year you die matters.  A proper trust-based plan, with a Formal Maintenance Program is the only way to ensure your estate will take advantage of tax laws in effect when you die.  If the tax law changes will you know or have time to get an estate plan before you die?  The current Estate Tax is 40% of everything in your estate.

Learn about Estate Planning Myths here.    Learn about Multigenerational Estate Planning here.