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Stop The Tax Tail Wagging the Estate Planning Dog

By Howard C. Stross
January 29, 2012


Assume that the federal estate tax has been eliminated. If you’ve heard that estate planning is unnecessary now because there’s virtually no estate tax, read on to see if for you that is an example of the tax tail wagging the estate planning dog.

This post is for Florida estate planning, but its message applies regardless of your geographical location.

For the vast number of Americans there will not be a federal estate tax, if they were to pass away in 2012. We don’t know what the exemption will be in 2013 and later years. Changes to the federal estate tax that passed at end of 2010 may have discouraged many from doing any estate-planning in 2011. For 2011 and 2012, $5 million is the estate tax exemption.

For many people that eliminated estate tax as a reason maintain an up-to-date estate plan.

The reasons people gave me when I asked why they did their Florida estate planning in 2011 are listed below (not necessarily listed in the order of importance.)

  • maintain harmony with beneficiaries
  • provide for the immediate family
  • provide for other relatives who may need help or guidance
  • provide for a special needs child or grandchild
  • give beneficiaries the ability to promptly receive or use property
  • reduce expenses to settle one’s estate
  • protect children from mismanaging their inheritance
  • lifetime asset protection for children and grandchildren
  • protection for a child who later divorces
  • personal asset protection for the person doing the planning
  • passing your business to a family member or key employee
  • avoid probate
  • avoid court-appointed guardianship
  • proper transfer family heirlooms
  • plan for incapacity; decide in advance about life support and designating the person that will make those decisions for you if you cannot.
  • help your favorite charity
  • establish a special type of trust to transfer wealth to children in the most tax-efficient way allowed and to benefit a charity
  • designate a guardian for your minor children
  • marriage
  • divorce
  • reduce taxes

The key to having an up to date estate plan concerning estate tax is to have a plan that uses formulas instead of numbers to work will with estate tax exemptions. Formulas will allow your plan to work no matter what the estate tax law may be at the time one passes away.

If you have a high net worth, this is the time to take advantage of the $5 million federal estate and gift tax exemptions before they may disappear. Even if estate tax is not an issue for you, there are many reasons to maintain a current estate plan. Stop the tax tail from wagging the estate planning dog.

Take action now. You’ll be glad you did.

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The lawyers at the Stross Law Firm, P.A. invite you to call or e-mail to arrange a free 30-minute consultation regarding your legal and advisory needs concerning business law, real estate, estate planning, probate and trust administration. We serve clients throughout Florida. Find out how we work and how we may be able to help you.