When people think about estate planning, many assume that today's tax laws will still be in place years from now.
But history tells a different story.
One of the most common misconceptions is that the federal estate tax exemption is somehow permanent. While the estate tax itself has been around for many years, the rules governing it have changed repeatedly.
The truth is simple:
The estate tax laws are only permanent until Congress decides to change them.
Today's exemption is historically high, which has caused many families to believe they no longer need to worry about estate taxes. At the same time, many of those same individuals believe income taxes will likely increase in the future because of our nation's growing debt.
Those two beliefs don't seem to fit together.
If the government needs additional revenue in the years ahead, is it reasonable to assume that today's historically generous estate tax exemption will remain unchanged for decades?
No one knows the answer.
But it's an important question to ask.
Over the last decade, many families have experienced tremendous growth in their wealth. Investment portfolios have appreciated, businesses have increased in value, and real estate has climbed significantly.
Your estate may look very different 10, 20, or even 30 years from now than it does today.
You've probably heard the investment disclaimer:
"Past performance is not indicative of future results."
That's certainly true.
However, when it comes to estate planning, another lesson from history deserves attention:
Tax laws change.
Over the past 25 years, Congress has adjusted estate tax exemptions, tax rates, and planning opportunities multiple times. There is no guarantee that today's rules will still be in effect when your estate is ultimately settled.
Consider this:
A healthy 65-year-old couple may have a life expectancy of 20 years or more. During that time, your investments may continue to grow, your home or business may appreciate substantially, and tax laws could change several times.
Rather than asking yourself whether you have an estate tax problem today, ask a different question:
* What if the exemption is reduced?What if my assets continue to appreciate?What if both happen at the same time?
Estate planning isn't about predicting the future.
It's about preparing for uncertainty.
A well-designed estate plan provides flexibility. It helps ensure your wishes can still be carried out even if tax laws change, allowing more of what you've worked so hard to build to benefit the people and causes you care about most.
The best time to review your estate plan isn't after Congress changes the law, it's before.
Amy Gould has worked in Estate Law, managing her clients' wills, trusts, powers of attorney, and healthcare directives for over twenty years. With Legacy, she can offer you a full financial planning package that includes insurance, wealth advisory, and accounting services on top of your estate planning needs, both for individuals and businesses. When you want to protect your assets, whether in Paramus, New Jersey, or anywhere in the United States, Legacy can help you protect what really matters.
To reach us for a free consultation, go to legacytcp.com/contact