Writing Your Tulsa Estate Planning Blog

The federal estate tax might soon be a thing of the past. That does not mean that you will no longer need a will.

Today, January 20, 2017, the Republican Party will control the Presidency, the Senate and the House of Representatives. Many people are hopeful that the party will quickly act on its long-stated goal of eliminating the federal estate tax.

If it does so, do not be tempted to think that you no longer need an estate plan. There are reasons to get one that have nothing to do with avoiding the estate tax.

At the very least, you still want to have a will as Forbes discusses in “Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!”
The reasons include:

•In a will, you appoint an executor who is in charge of administering your affairs. The executor can make sure that all of your debts are paid and that your assets are handled appropriately.
•If you have minor children, a will is used to designate who you want to have guardianship of those children in case something happens to you.
•In a will, you can give specific bequests to people. That means if you want one of your children to have a specific piece of personal property for sentimental reasons, a will is the place that you do that.
•While getting a will you can also get advanced medical directives that will determine how you should be cared for, if you are incapacitated and not able to communicate with doctors at the time.
•A will is more efficient than allowing the courts to handle your affairs without your directions. It also protects your estate by making sure that your property does not go to people you do not want to have it.

Reference: Forbes (Dec. 8, 2016) “Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!

Many family dynasty trusts created during the Great Depression to avoid rising taxation, will automatically terminate soon. Trustees and beneficiaries need to be prepared.

One of the lasting legacies of the Great Depression will soon come to an end. In response to that crisis, the government greatly increased the gift and estate tax rates. Wealthy families responded, in turn, by creating dynastic trusts to hold their wealth and preserve it for future generations.

Most of the trusts created at that time have mandatory termination dates at which time the trust assets must be distributed to the residual beneficiaries.
Successfully carrying out that process will require some planning as the Wills, Trusts & Estates Prof Blog explained in “Preparing for Trust Termination.”

The first challenge for many trusts and trustees will be determining the residual beneficiaries. In many cases, they could be distant relations of the original trust settlors and not the same people who currently receive regular distributions from the trusts.

Once the beneficiaries are determined, they will need to plan for how receiving the trust assets, will impact their lives and financial futures. Depending on the amount of money received, the beneficiaries’ tax and estate plans could change dramatically.

Those who do not plan appropriately, could face negative consequences that could have been avoided.

If you are a residual beneficiary of a depression era trust, you should seek independent legal advice. It might not be a good idea to rely on the advice offered by the trustees and their legal advisors.

You need an attorney who will be acting only in your interests.

Reference: Wills, Trusts & Estates Prof Blog (Dec. 5, 2016) “Preparing for Trust Termination.”

What policies President-elect Trump chooses to pursue and whether they prove to be successful or not, could have a dramatic impact on charitable giving.

Whether it is to set up a lasting charitable legacy or to avoid paying the estate tax, creating plans for charitable giving has always been an important part of estate planning. After the unexpected results of the Presidential election, it is not clear exactly how estate planners will deal with their clients’ charitable wishes. It is actually not clear which policies President-elect Trump will pursue after his inauguration that will have an impact on charitable giving.

Bloomberg looked at some of the possibilities in “Where Charitable Giving May Head With Trump.”

Trump has stated that he will increase GDP growth by 4% per year, which would likely lead to more charitable giving. However, many economists doubt he will be able to fulfill that promise due to economic and demographic circumstances which are beyond his control.

The President-elect campaigned on cutting taxes, especially on the wealthy. This would also likely increase giving to charity. However, his nominee for Treasury Secretary has cast some doubt on those tax cuts, by recently stating that any cuts on the wealthy will be offset by reducing deductions.

It is also thought that Trump would like to eliminate the estate tax. This could reduce some charitable giving, at least when the impetus for the giving is to shrink the value of the estate.

Some of this uncertainty should be cleared up soon, when the President-elect begins submitting budget proposals to lawmakers. They should give an indication of what policies he will pursue.

Reference: Bloomberg (Nov. 27, 2016) “Where Charitable Giving May Head With Trump.”

President-elect Donald Trump ran his campaign as a populist champion of the working class. His vow to eliminate the estate tax could be a test of whether or not he is.

Pollsters have long known that asking questions in different ways can lead to different results. This is true when Americans are asked about the estate tax. If people are asked whether they favor a tax when someone dies, the majority will say that they do not. However, when they are also told who the estate tax affects, then the majority of people support the estate tax.

Overall, the country is more or less equally divided on this issue.

That makes watching what President-elect Donald Trump and the Republican majority in Congress do about it interesting as an indication of what type of President he plans to be, as Bloomberg discusses in “Estate Tax Repeal Would Be a Bonanza for Trump and His Cabinet.”

Trump campaigned on the notion that he would bring prosperity to the working class. However, he also favored repealing the estate tax, which no one in the working class pays. His family would also benefit greatly from repealing the tax. One estimate of his net worth, that he has said is too low, would indicate that his estate would save $545 million by not having to pay estate taxes. Several members of his cabinet would also save millions of dollars.

This is important for people who do want to see the estate tax eliminated.

If Republicans do make an attempt to repeal it, then it is certain Democrats will make noise about how much the President and Cabinet stand to gain to use as a wedge between the President and his supporters. For that reason, Republicans might think twice about a quick repeal even though they have long advocated eliminating the estate tax.

Reference: Bloomberg (Dec. 9, 2016) “Estate Tax Repeal Would Be a Bonanza for Trump and His Cabinet.”