Spotlight on Today’s Estate Tax Environment

Premium Partners, want to quickly gain insights on securing your clients’ wealth in today’s estate tax environment? In case you missed it, Mark K. Harder and Haley E. Clough from Warner Norcross + Judd shared some key considerations while filming in our studio shortly after the higher federal tax exemption took effect.

Here’s some helpful information from just one segment (“Drafting Trusts for Estate Planning”) in the “Planning Techniques for the Taxable Estate” on-demand seminar, which you’ll find is packed with helpful materials and easy-to-follow slides. 

These excerpts have been edited for length and clarity.

Impact of High Exemption

Mark K. Harder: The impact that the high exemption amount has had has really changed the dynamics of how we practice in this area. The higher estate tax exemption we have now up to $15 million. Over the course of my career, it's gone from 600,000 on the low end now to $15 million, which is unheard of.

It used to be that everybody had estate tax problems and now very, very few people do. But the ones that do are high-stakes estates. That shift to move more and more to high exemption does have impacts on the family and the way your planning is going to work. Your credit shelter amount is going to be very large. Your marital deduction, except in just huge estates, is going to be potentially relatively small.

In some cases, if it turns out that the deceased spouse's assets are less than the remaining exclusion amount, the marital trust won't even be funded. That's going to make it important as you're thinking about how to draft your marital deduction formulas to really consider, How are assets passing and is the spouse being provided for adequately?

Limitations of Formulas

Mark K. Harder: It's important to think too that formulas have their limitations. They're only going to affect the assets that are in the revocable trust, or that name the revocable trust as a beneficiary, such as an insurance policy or assets that pass from the decedent's pour-over will. The formula is not going to have an effect on how assets are passing that are passing outside the trust, things like joint ownership, tenants by the entirety beneficiary designations, at least where it's not directed to the trust. TOD, POD accounts, again, unless directed to the trust, Lady Bird deed contractual assignments, or contract arrangements or things that are in other trust. 

Want More?

Disclaimer from the seminar presenters: The materials and information in this presentation have been prepared for informational purposes only. This is not legal advice, nor intended to create or constitute a lawyer-client relationship. Before acting on the basis of any information or material, readers who have specific questions or problems should consult their lawyer.