Estate Planning 2021

Whether or not you follow all of the activity and talk happening in Washington, one topic that you might want to keep an ear open for is the federal estate tax discussions. 

Currently, for a decedent dying in 2021, the federal estate tax exemption/exclusion is $11.7 million.  You may think that you are “safe” in avoiding this possible tax because you are under this amount.  However, there are ongoing discussions of that amount being lowered – but to what amount, is undetermined.  I have read $6 million, $5 million, even $3.5 million.  And, if it is lowered and you don’t plan accordingly, your estate could be subject to federal estate tax.  I am pretty certain that you wouldn’t want your estate to pay any taxes that could be avoided. 

So, where am I going with this blog?  Maybe you should do an analysis of your assets – ALL assets, whether solely owned, owned jointly with spouse, owned jointly with another person, assets such as retirement or life insurance with designated beneficiaries; anything to which you have a right to claim as an asset. 

Start simply by adding up the values of these assets.  In our world today, it probably won’t take long to reach a few million dollars or even several million dollars.  And, since we don’t have that crystal ball to know what the federal exemption/exclusion could be changed to, you may want to evaluate your estate planning to ensure that it is designed in such a way to avoid taxes in our ever-changing world. 

If you are married and will inherit assets upon your spouse’s death, there is a tool called “portability” wherein, upon the first spouse’s death, the unused portion of that spouse’s unused federal exemption/exclusion can be “ported” over to the surviving spouse to be available upon their passing to help reduce or eliminate the payment of any federal estate taxes. 

We often find that when the first spouse passes, the surviving spouse does not feel a need to do anything for the deceased spouse’s estate.  This can be true for some, but not necessarily true in all cases due to the value of assets and portability. 

Before we get any closer to the end of the year, do yourself a favor and take a look at your assets and your estate plan.  You may want to do some planning before the end of the year when the tax laws can change.  Don’t put it off.  I know it may be an overwhelming thought but it will only weigh heavier on your shoulders if you aren’t proactive. 


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About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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