One of the features of the tax reform legislation has been to double the federal estate tax exemption to over $10 million. Regardless of whether this becomes law, undertaking an appropriate level of estate planning remains important.
First, there is still a need to take care of family, to take steps to protect children, and to make sure a plan is in place to protect your home and the assets that you have accumulated. In that sense, estate planning is very much about taking care of those who are close to you. This should remain a priority regardless of when the estate tax kicks in.
Second, health care planning remains critical to ensure that your wishes will be carried out and values upheld, if you are in a situation where you are unable to articulate them.
Third, estate planning remains a mechanism to work towards life time goals, and to prepare beneficiaries to both receive assets and the knowledge, experiences, and values that are needed to preserve them.
Fourth, without estate planning, the assets that one does accumulate likely will be subject to probate. Estate planning can sometimes provide alternatives to probate, so that assets are transferred without the delay, expense, and stress that can accompany probate proceedings.
Finally, tax planning still may be necessary. The federal estate tax threshold does not affect the Illinois estate tax. That remains at $4 million. Therefore, it is possible for some families or individuals to have an estate that is exempt from the federal tax but still subject to Illinois estate tax.
For these reasons, estate planning remains an important thing to do and to keep current. Regardless of what happens with the federal legislation, neither the needs of families nor applicable state tax rates appear likely to change in the foreseeable future.