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The New Rules of Retirement by Robert C. Carlson

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Chapter 12Estate Planning Is More than Taxes

A revolution occurred in estate planning.

Estate planning was in turmoil for more than a decade, but the tax law now is settled. The new rules and strategies are set, and for many people the best strategies are very different from those before the changes began.

The turmoil began with the 2001 tax law that made multiple changes over 10 years and then scheduled a reversion to the 2000 law. A 2010 deal in Washington prevented the reversion and temporarily eliminated the estate tax for most people. The 2010 law, with some modifications, became permanent in 2012. The turmoil in the law is over for at least a while, and with it the major excuse to procrastinate about estate planning.

Less than half of 1 percent of estates of adults who passed away in 2014 incurred the federal estate tax, estimated the Tax Policy Center. That's because each person has a lifetime $5 million lifetime estate and gift tax exemption that increases with inflation each year. The exemption for 2016 was $5.45 million. In addition, the new “portability rules” allow married couples a true doubling of the individual exclusion. A married couple can pass $10 million (indexed for inflation) to future generations free of estate and gift taxes.

Don't conclude from all this, as many have, that because you no longer have to worry about the federal estate tax, you don't have to worry about estate planning. Also, don't conclude that you don't have to consider taxes at all in ...

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