Many people have asked me how estate planning might change if Congress repeals the federal estate tax. As you can imagine, predictions of this kind are highly speculative. But most people who need an estate plan under today’s laws will still need one in 2018 and onward. Here are the principal reasons why:
(1) Even if the estate tax is repealed it can come back. The estate tax has changed many times over the past 90 years. It is one of America’s most controversial laws and you can be sure that a constituency will exist for rolling back any successful reform, especially if the reform lacks bipartisan agreement.
(2) Washington, D.C. and Maryland impose taxes on sizeable estates. As mentioned in my previous blog post, D.C. and Maryland are increasing their estate tax exemption to be more competitive and attract investors and taxpayers from neighboring states like Virginia. If your net worth exceeds the current federal exemption indexed for inflation, however, an estate plan may be necessary to prevent your beneficiaries from overpaying.
(3) An estate plan is about more than taxes. Many people are primarily interested in legal protections or making sure that a responsible party is managing finances on behalf of loved ones. Therefore, while the need for particular services may change, there will still be people who need a plan.
Paul Oliver Eisler, J.D. writes about legal issues that affect people and businesses in the District of Columbia and Maryland.