Although our current president-elect campaigned on promises to fight for blue-collar workers, one of his major policy proposals will likely benefit only a few very wealthy individuals. The repeal of the combined federal gift and estate tax is a cornerstone of the Trump tax plan. While it is impossible to know at this stage what Trump - or Congress - will actually do, eliminating the gift and estate tax seems probable, since it will have little effect on tax revenue and is therefore unlikely to generate much controversy.
The current tax is only applicable to those whose gross estates, plus prior taxable gifts, total over $5.45 million. The exemption will increase to $5.49 million for those who die in 2017. The portability of the exemption means married couples will have a combined exemption of $10.98 million in 2017. And, in California, there is no state-level estate or inheritance tax.
Even if the federal estate tax is repealed, careful estate planning will remain essential for those with significant wealth. The focus of estate planning for someone with a substantial estate would change, however, from avoiding unnecessary taxation to making decisions about which heirs should inherit assets and which charities should receive bequests. Asset protection from the claims of creditors, or in the event of divorce, will remain an important estate planning priority. In California, avoiding probate will remain a major goal of estate planning for wealthy individuals, since statutory fees for lawyers and executors are based on the value of the estate.
For those who do not have significant wealth, a repeal of the federal estate tax will make no difference to estate planning priorities. Regardless of the size of one's estate, estate planning is essential to ensure that after death or in the event of incapacity, one's property is managed and distributed according to one's wishes.
Source: Forbes, "What The Trump Tax Proposals Mean For High Net Worth Retirees," Jeff Fosselman, Dec. 12, 2016