Does the new tax law passed in December 2017 mean you don’t have to do estate planning anymore?
No! That is a very incorrect assumption that some people are making.
In fact, there are (at least) four good reasons you still need to be concerned about estate planning even after the new tax law.
Don’t be fooled by news articles that casually assert estate planning is a thing of the past thanks to the tax law. They are saying this because the estate tax exemption increased so dramatically under the new tax law.
When these stories claim that you no longer need estate planning, they are talking about advanced estate planning documents like trusts. You do still need a will and power of attorney.
First, you need significant assets for this to affect you. The purpose of a trust is to minimize estate taxes. A trust was always for those with fairly significant assets. Now, that number is higher. There is just a higher level of assets you need to have before federal estate taxes kick in. The old exemption was $5 million. Now it is $11 million per person and $22 million per couple. Unless you had over $5 million dollars in 2017, the new tax law didn’t change anything for you regarding federal estate taxes.
Second, the new tax law only applies to Federal estate taxes. Maryland still has an estate tax. And Maryland’s estate tax exemption is much lower than the federal limit. For 2018, Maryland’s estate tax exemption is only $4 million. In 2017 it was $3 million.
As of now, Maryland’s estate tax exemption is set to mimic the federal exemption starting in 2019. But I am betting Maryland will change that now that the Federal exemption increased so dramatically. So even if you don’t need a trust for the federal estate tax, you may very well need it because of Maryland’s estate taxes.
Third, the new tax law only lasts for 8 years. Then it goes away. Will Congress extend it? Kill it? Will they change it completely the next time Congress changes hands? Who knows!!??
Fourth, none of this changes the fact that you still need basic estate planning documents – a will, power of attorney, and advanced directive. There are very good reasons to get those basic estate planning documents that have nothing to do with taxes.
Learn more: Discover what you need to know about wills, trusts & estates in Maryland. Click here to see our Free Legal Consumer Guide to Wills, Trusts & Estates and get answer to your questions today. Know your options. Be informed. Protect yourself.
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