Estate planning is about much more than deciding how your assets will be distributed upon your death. It also involves a considerable amount of financial planning in order to maximize the value of your estate.
For instance, many people take into account estate tax when they are making an estate plan. Estate tax is what you pay for the right to transfer property in the event of your death. States can impose their own estate tax, although Florida does not, but there is also a federal estate tax to consider.
Most people will not have to worry about paying federal estate taxes because estates worth less than $5.45 million are exempt. However, if your estate is worth more than this, you will want to be aware of a big change recently proposed by the IRS.
The change is fairly complex and readers who are interested in the specifics of the proposed rules can read this article in The Wall Street Journal. Basically speaking, however, the change would make it more difficult for people to lower their federal estate taxes through lowering the value of assets like family-owned businesses. For better or worse, this is a fairly common strategy to minimize estate tax obligations, and now the Treasury Department and IRS want to shut this option down. Whether this will happen or not remains to be seen.
These types of changes can have a critical impact on a person's estate plan, which is why it can be essential that you are aware of them when you are creating or reviewing your own plan.
However, revisions to estate tax laws can be very complicated and they don't always apply the same way for every person, as is the case with this most recent proposed change. Because of this, it can be a good idea to work with an attorney who is familiar with these changes and what they mean for individual estate plans.