The fact that men and women are living for many years longer than in the past means that Americans as a whole need more financial support than before. This fact raises issues and fears for people living in Minnesota and throughout the country who are not certain whether their funding will hold out. One respected study shows that people are more worried about running out of money than they are about dying. These factors make the need for estate planning even more critical for today’s adults who are moving into middle age and the later years approaching retirement.
Due to changes in the federal estate tax exemptions, only a very small percentage of Americans will be subject to an estate tax. That fact has changed the focus of estate planning, which no longer needs to dwell on sheltering assets from taxes. The emphasis today is more on generally preserving assets, minimizing capital gains and being positioned to obtain governmental benefits where it is desired.
One incidental effect of the new estate tax structure is that it is no longer as beneficial for people to have their estate plans encourage gifting during life. The common gifting of up to $14,000 per year to individuals is no longer beneficial and actually exposes the donor to a risk of financial elder abuse. Unless one is gifting away assets to qualify for Medicaid or other benefits, this strategy can lead to depleting the donor’s funding that he or she will need for survival in the later years.
There are a variety of other ways to maximize one’s funding in order to have more security in those later post-retirement years. For example, choosing a place of domicile can now have more of an economic impact. A few states that are attractive residences have no state income taxes while other states have substantial taxes. There are many other techniques for saving and maximizing one’s funding through estate planning in Minnesota and elsewhere. These are best discussed and learned through an interactive process with one’s experienced estate planning attorney.
Source: wealthmanagement.com, “Estate Planning for an Aging Population“, John Goralka, July 5, 2016