Estate Planning

Last week on December 22, 2017, President Trump signed into law the largest overhaul of the U.S. tax code since the Reagan administration. The law has been widely hailed as very positive for business, and it appears that the law also provides benefits for many middle-income taxpayers.

When the American Taxpayer Relief Act was enacted in January 2013, it all but eliminated the concern over the estate and gift taxes for many Americans by making the $5,000,000 exemption (indexed for inflation) permanent.

Shock and sadness over Prince’s recent death was quickly followed by a big question. As a Los Angeles Times oped headline asks and answers: “How could someone rich and famous like Prince die without a will? It’s not unusual. Just ask an estate lawyer.”

But according to a new Spectrum study, the business model is still new to most investors. When asked to rate their familiarity with various investment terms on a scale of 0 to 100, where 0 is not at all familiar and 100 is very familiar, wealthy investors rated their knowledge of the term “robo-advisor” at just 15.47.

Summer’s around the corner and for many families that means vacation time.

With the current $5.34 million federal estate tax exemption has estate planning lost its urgency? Of course estate taxes still come into play for many wealthy Americans like the Academy award-winning actor Philip Seymour Hoffman.

The early and unexpected death of the actor James Gandolfini triggered another high profile estate planning disaster. Gandolfini who starred in the acclaimed HBO series The Sopranos from 1999 to 2007 died at age 51 after suffering a heart attack while vacationing in Rome.

I read recently where Jamie Johnson an heir to the Johnson & Johnson fortune shared in his documentary “Born Rich” that he was clueless about the extent of his family’s wealth until a classmate told him (and the rest of his class) that his father was listed in the Forbes 400.

As copywriters well know when you reference learning in a headline readers’ interest tends to perk up. Add a mention to the “rich and famous” and you really generate interest. So “Lessons of the Rich and Famous . . . in Death” about estate planning caught my attention.

One of life’s certainties — taxes — is a little less certain in 2012. It’s increasingly unlikely Congress will address the expiring Bush tax cuts before the November elections. Instead the debate will be left to a lame-duck Congress or even pushed into 2013. That’s not great timing for tax planning.