Estate planning changes increase exemption amount
5/6/2016 | Kaplin Stewart Blog
Many Pennsylvania residents have heard that Congress has raised the estate tax exemption threshold to $5.45 million for 2016. That means that individuals who have amassed less than that amount will be able to pass that wealth down to their chosen heirs free from estate tax. This estate planning change is welcome news for some, but others feel that the increase is not large enough. Regardless of where one stands on the matter, the news serves as a reminder of the need to review one’s existing plan.
Married couples can still double the exemption amount, bringing them up to $10.9 million. Any assets that exceed that amount will be subject to estate taxes, which can significantly reduce the amount of wealth that is able to be handed down to heirs. In order to protect additional wealth from excessive taxation, a detailed estate planning strategy is required.
For many people, the best course of action is to transfer wealth into one or more trusts. A trust is an excellent way to remove wealth from one’s taxable estate while also protecting that wealth from loss due to court awards, liens, bankruptcy and divorce. There are a multitude of trusts available, and these financial tools are highly customizable.
For those in Pennsylvania who have already worked out an estate planning package, news of the recent increase in the estate tax exemption may prompt a review of those plans. In many cases, estate plans can be streamlined or simplified. The process of planning for the future is ongoing, and it is important for families to make a periodic review of the existing framework of their plan.
Source: The National Law Review, “Recent Changes in Estate Planning Laws May Be Cause for Review of Your Estate Plan“, Les Raatz and Robin L. Miskell, May 5, 2016