The Estate Tax May Be Almost Gone, but the Need to Plan Remains
According to his tax plan, Governor Phil Murphy does not plan to halt or reverse the repeal. There will no longer be a need for complex estate planning and gifting to avoid the estate tax at the state level, and if Trump gets his way – at the national level either.
Q: Why do People Still Need Trusts?A: Even if trusts become unnecessary for estate tax purposes, they still provide important protections for beneficiaries. Any trust that protects assets from government agencies (think Special Needs and Qualifying Domestic Trusts), creditors, and soon-to-be ex-spouses (hello, Spendthrift Trusts) are valuable tools. Also, minors still need their inheritances to go into a Minor's Trust, which does more than simply provide a place to keep the inheritance - it allows the decedent to choose who will control the child's funds. In addition, do not forget our furry friends. More and more, individuals are creating Pet Trusts to ensure that their lovable companions are taken care in the event the owners pass away before them.
Q: How can estate planning be beneficial in relation to charities?A: Estate planning is also the best way to ensure that individuals can leave bequests to their favorite charities. Some might presume that individuals leave money to charities to avoid paying estate taxes, but many individuals actually want to leave a little something for their favorite non-profit. Indeed, non-profits are continually reaching out to promote "legacy giving" and, in some instances, are looking to collaborate with estate planners to encourage that practice.
Q: Why can estate planning still be less expensiveEven if there are no estate taxes, individuals continue to need advice regarding inheritance taxes at the state level. Also, dying intestate is still more expensive than dying intestate. If there is no Will, there is a slightly higher fee for being appointed administrator, and the courts will require a surety bond be posted by the administrator. A well-prepared Will contains a waiver of the surety-bond requirement. The bond itself can cost the administrator (e.g. estate) thousands of dollars per year for very large estates (over $2 million) and the administrator must have good credit to obtain the bond. If the applicant's credit is not good, then the proposed administrator will either not be bonded or cannot be appointed as estate administrator, or will have to pay a higher bond premium.
Q: What are some cons of the process of being appointed as administrator?A: The process for being appointed an administrator can be more complex and time consuming than being appointed executor of an estate. For example, an administrator may need to obtain renunciations from everyone else who has an equal right to serve, and he or she must provide approximate values of all the decedent's assets including vehicles, bank account information, and real property. All that is required to be appointed an executor is a certified copy of the death certificate and the original Will.