VanAntwerp Attorneys, LLP
Phone: 606-618-0698

Tax reform does not mean less need for estate planning

There was a time when so-called "death taxes" were a major concern for individuals in Kentucky and in other states. These are the estate taxes, charged to a person's estate after death to allow transfer of property to beneficiaries; and inheritance taxes, those paid by heirs on the value of the property they receive.

Such worries are not as great as they used to be, especially in the wake of the passage of federal tax reform late last year. Exemptions that allowed for up the transfer of nearly $5.6 million without federal taxation doubled to $11.18 million per individual. What that means for a family is that married couples are in a position to transfer more than $22 million worth of an estate to heirs tax free. By some estimates, the effect of the law is that the federal estate tax is dead.

In the minds of many this might suggest the estate planning incentive to avoid taxes is gone and perhaps so is the need for estate planning. But many reasons remain for putting together and maintaining a strategically crafted plan.

For example, while the federal estate taxes are gone, some states still impose them. There are also six states that continue to levy inheritance taxes, one being Kentucky. To minimize the impact of those taxes and ensure that the greatest amount of funds transfer to intended recipients, there is value in working with a skilled estate planning attorney.

Other reasons for good planning include the following:

  • Failing to employ foundational estate planning tools, such as a will and trusts, leaves the estate subject to disbursement through a time consuming and sometimes costly probate process.
  • Allowing the testator to protect and preserve maximum asset value against loss due to known or anticipated problems unique to individual heirs.
  • Avoiding possible issues of step-children, half-siblings, or children considered family but not legally adopted, from being cut out of the estate.

Even siblings with normally cordial relations can be reduced to squabbling during the settlement of an estate. By having a plan in place, it is possible for you to acknowledge possible dispute points and to provide the means by which they are to be resolved.

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