Estate Planning Fears

Now that tax rates are falling and exemptions rising in many jurisdictions, state and federal estate and inheritance taxes are not what keep people up at night.  Rather, most people spend their time worrying about the impact the money they leave will have on heirs. 

While your favorite grandchild may spend her inheritance going to med school and finding a cure for cancer, what about your nephew who has been in and out of rehab?  This is just one of many situations that people fear.  However, it is difficult to build an estate plan that anticipates every scenario. 

The “death tax” rates have been the subject of much debate notoriously unreliable in recent years, making it difficult to gauge a long-term estate-plan.  To complicate matters even more, as of this year fifteen states and the District of Columbia impose their own estate tax and six states also impose an inheritance tax.  Yet, many states have been raising their exemptions to align themselves with the federal level, or have eliminated their inheritance taxes altogether. 

This is good news for parents who want to leave their children, other heirs and charities as much money as possible.  But concerns arise as to whether wealth could sustain and enrich the lives of heirs, or cripple them.  People worry that the money will end up mismanaged, and if their legacies, experiences, and beliefs will survive the next generation.

As new tax rates go into effect, it may be a good time to sit down with your advisers and discuss how the money you leave can support your core beliefs, philosophy, and intentions, and how you can prepare your heirs to maintain it. 

See John E. Girouard, Estate Planning Fears that Keeps Us Up At Night, Forbes, Oct. 29, 2014.