Having grown up listening to and memorizing every Beatles song, I was deeply saddened by the death of George Harrison. His musical and social contributions will remain indelibly etched in the culture of this country. So why is it that an estate tax attorney chooses to write about Rock ’n’ Roll?
Shortly after George Harrison’s death, I was reminded of a song he wrote in 1966 entitled “Taxman.” The lyrics are scathing, but true. And for our clients, a healthy and even humorous dose of reality about the American tax system: that even upon your death the government can levy a substantial and confiscatory tax. That’s the bad news. The good news is that with careful attention to planning, these estate taxes can be substantially mitigated, or in the great majority of instances, eliminated.
A TIME OF UNCERTAINTY
The Economic Growth and Tax Relief Reconciliation Act of 2001 provides that estate taxes are supposed to be magically repealed in 2010. After 2010, if Congress does not act, federal estate tax exemption will revert to $1 million. Most clients remain skeptical about the prospects of any repeal.
In addition to the changes in tax law, the family structure has dramatically changed. Today, families are more socially, geographically, and financially diverse than ever. As a result, our clients’ needs have expanded. No longer is just having a Last Will and Testament in place an adequate game plan. Gone are the days of not having one’s estate plan periodically reviewed.
Inherited assets for the next generation will need to be protected from creditors and divorce claims. In the aftermath of 9/11, a greater effort is needed to expunge the notion of insurance planning as a “dirty word” from our clients’ thinking. Just like driving a car at 70 miles an hour requires a seat belt, most sophisticated estate tax planning strategies also require a safety net.
Charitable estate tax planning techniques remain important strategies for clients to consider as well.