The Tax Cuts and Jobs Act of 2017 doubled the exemptions that apply to estate taxes. Federal estate taxes won't apply to individual estates unless their net worth exceeds $11.18 million. For couples, the exemption is $22 million. This means that nearly all Americans — except for the few who have net worths exceeding $11 million — will not have to worry about estate-tax planning. This might beg the question: Is estate planning obsolete?
No, estate planning is not obsolete. Americans still need to plan for the day when they're no longer here or no longer able to make decisions for themselves. A well-planned estate could benefit families in numerous ways, such as:
- Prevent or reduce the chances of family infighting.
- Lower the costs and time associated with probate proceedings, or eliminate the need for probate altogether.
- Offer clear guidelines about how to distribute an estate to heirs.
- Make a plan for protecting assets from creditors.
- Make a plan for protecting the assets of those with special needs.
- Distribute wealth to heirs gradually over time with a spendthrift trust.
- Set up health care proxies, powers of attorney and living wills that go into effect in the event of incapacitation.
- And much, much more, depending on your situation and needs.
Every adult in California should have an estate plan set up even if it's just a rudimentary one. Have you completed the basic necessities of your estate planning? Make sure you know what needs to be done to finalize your will, powers of attorney and other estate-planning documents before it's too late.