Just recently President Donald Trump announced that his administration intends to impose sweeping changes to the tax structure of the federal government. One of those changes would involve ending the estate tax, which many readers of this California estate planning blog may know as the "death tax." Most individuals have an unfavorable view of this tax due to its potential to double-tax assets and income that likely were already subject to taxation at earlier points in time.
In the past, many people who have taken the initiative to create an estate plan have kept the federal estate tax in mind and have devised strategies that would limit their wealth's exposure to taxation under it. Now, however, it seems as though individuals may be able to reduce their concern over seeing their estates reduced due to the imposition of the federal estate tax.
Even if the federal estate tax disappeared, it may not be in readers' best interests to abandon their strategic estate plans at this time. One reason is that there are other taxation liabilities that estates may be subjected to that may survive the federal government's proposed tax reform. Additionally, an estate plan is still necessary to ensure that a person's end-of-life wishes are effectively communicated and that their desires for where their money should go will be enforced through their legally binding estate documents.
There is no guarantee that the federal government's intention to end the estate tax will come into fruition. As such, readers of this estate planning blog are encouraged to keep their wills, trusts and other testamentary documents up to date so that their wishes may be implemented through their estate plans.
Source: The Motley Fool, "3 Reasons You'll Still Need Estate Planning Even if the Death Tax Disappears," Dan Caplinger, Oct. 21, 2017