It is very important to remember that estate planning is not a “one and done” kind of thing. It is an ongoing process, and it should be viewed as such. Important things that happen in your life can immediately affect your existing estate plan, and this is something to keep in mind. If you procrastinate even when you know your estate plan needs to be adjusted you are taking a gamble. And the problem with this type of wager is that you are putting your family members at risk because if you lose the bet you will not be around to suffer any of the consequences.
In addition to things that take place that are specific to you and your family there are things that are out of your control that can also impact your estate plan. One of them would be the ebb and flow of the political mood in Washington, and with this in mind it would be a good idea to consider the lingering impact of the recent federal debt ceiling negotiations.
Though both sides felt as though there was the need to take action to reduce the deficit, there were some differences of opinion. Some felt as though reductions in spending alone will be enough. Others insisted that there must be a combination of decreased spending coupled with increased revenue. For now, the former camp got its way and there is no immediate mandate toward increasing revenue, which would involve raising taxes.
But, since there is very real pressure to increase revenue from some quarters, and “the wealthy” are being targeted, it would be wise to recognize the fact that the current tax relief bill that set the estate tax exclusion at $5 million and the top rate at 35% is going to expire at the end of next year. If it does, the rate goes up to 55% and the exclusion will be reduced to $1 million. Only another tax relief measure will change this, and this time around it may be a bit harder to get such a bill through Congress and past the president’s desk.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.