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Below is my response today to someone who posted on a gun forum that estate planning is “simple these days” — actually, my first response was THIS little guy, ROFL


Taxes are usually an important consideration, but should rarely, if ever, drive an estate plan. There are plenty of other, more important, things to plan for and though prospective clients may think those things are simple when they walk into my office for their free design meeting, by the time they walk out two or three hours later they realize even basic planning is not so simple.

But you are correct, estate tax currently hits only 0.2% of estates and almost everyone could avoid estate tax without any planning IF THEY DIE TODAY.

Most of my clients do not expect to die TODAY. In fact, the average age of an estate plan is apparently 17 years, which is scary given how frequently the law changes (and other things like assets, family).

A lot can happen in 17 years, whether you are planning to avoid taxes or gun control. Based on Trump’s refusal to repeal even Obamacare, i have my doubts about him repealing the estate tax, but even if he does, the pendulum will swing back most likely and you need a plan for that unless you expect to die TODAY.

Furthermore, several states have estate or inheritance tax (one is now being proposed in California) and even right now there is a new death tax called capital gains tax which, especially for Californians since we have no special rate for capital gains, is a very significant death tax, potentially, which can be avoided in a number of ways. For example, using the Clayton election (i’ve been using it for years, now it’s becoming more common) can provide a second step-up in basis at the surviving spouse’s death. There are additional ways to avoid capital gains through estate inclusion, even if the estate tax is repealed, for example providing the survivor with a limited testamentary power of appointment and exercising it in a way that triggers the so-called Delaware Tax Trap. Completely outside of estate tax framework.

Under both Trump and GOP plans, if they do repeal the estate tax they will replace it with a carryover basis regime and details on that are VERY sketchy at this point.

The key to planning is FLEXIBILITY:

Planning is complicated, even for small and medium-sized estates.

And this is just taxes, the lowest priority goal of planning that comes after we consider how to protect the spouse and kids, each with their own individually tailored life-long asset protection trust.

And then incentive provisions and that family firearm training institution that lasts for generations.

[For large estates north of $11 million it is even more complicated due to extreme uncertainty over the new proposed regs under 26 USC § 2704 re valuation discounts.]

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