The Trump Series – Estate Taxes

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  • The election of Donald Trump as President has generated a very busy news cycle. We have decided to tackle several key topics being discussed in the press in a series of “In The News” posts we are going to call The Trump Series. The goal is to try and summarize the discussions in a way that is relevant to the investment planning strategies of our clients and potential clients. We will not be speculating on the probability of implementation or taking a political stance. We will just be doing our best to provide our perspectives regardless of the outcomes.
  • In this first article, the topic being discussed is the estate tax. The estate tax is a tax levied on the net value of the estate of a deceased person before distribution to heirs. A detailed summary can be found on the IRS website. States may also levy a tax.
  • The estate of an individual is required to file an estate tax return if their combined estate and gifts is valued at more than the filing threshold for the year of the individual’s death. For 2017 the filing threshold is $5,490,000. Due to the portability of the federal estate tax exemption between spouses the number effectively doubles if assets are jointly titled and surviving spouses affirmatively elect to add unused exemptions to their exemption.
  • In 2015 the number of estate tax returns filed was 11,917. Compared to 2006 that number is down nearly 76% due to the gradual increase in the filing threshold over the years.
  • How should individuals plan for the potential repeal of the estate tax? Should individuals put estate planning on hold until it is resolved?

Our Take    

  • The most important point we would make is that the estate tax only impacts a fraction of 1% of the total population, but estate planning is relevant to everyone. Thus, the discussion about estate taxes should not cause the average individual to delay or change their estate planning strategy. If you are an individual with more than the $5.49 million in assets or a married couple with more than $10.98 million specific estate tax strategies should be discussed with an estate tax attorney.
  • If estate planning is relevant to everyone, when should estate planning begin? Most people tend not to think about estate planning until they are retired, but there are numerous reasons to start planning right away. The birth of a child. Marriage. Starting a new business. The list goes on. Do not think about estate planning as only the assignment of assets. It is about protecting you, protecting your family and providing peace of mind. Start right away. You can always make changes.
  • Once you commit to the idea of an estate plan, where should your estate plan begin? The most beneficial first phase is to establish a will or, preferably, a trust. Other key components that also have a valuable place in an estate planning process include: account beneficiary designations, powers of attorney, life insurance, final arrangements, health care directives, tax planning and document storage, among other factors.
  • In summary, ignore the news cycle. Do not wait and see. Plan. Our investment planning services at Entasis Asset Management include estate planning suggestions. If you are not currently working with an investment advisor please contact us today.