Estate Planning vs. “Estate Tax” Planning
“No estate tax for me! Great! I don’t need to worry any more about estate planning.” This is the comment that I am hearing when I share with people that Congress acted to raise the estate transfer tax exemption to $5 million. Less than 2% of Americans die leaving an estate valued at over $5 million. This does not, however, mean that the need for estate planning is eliminated. Do not confuse “estate tax” planning with the much broader issue of estate planning.
As Christian stewards of God’s material blessings held in our estate, we have responsibilities for more than managing taxes. Meeting our stewardship goals still requires careful planning in many areas, especially estate planning. Some of the issues to think about that are handled through wills, trusts, and other estate management tools include:
• Naming guardians for minor children.
• Managing the inheritance of children and grandchildren of all ages who have not developed good financial management skills.
• Creditor protection of inherited assets.
• Disability protection for yourself and a surviving spouse.
• Family inheritance planning in second spouse situations.
• Including your church, Christian ministries, and other charitable organizations.
• Income tax planning on retirement account distributions.
In reality, the newly passed estate tax law is probably a good reason to review your existing estate plan and see if it needs to be updated. If you are part of the 98% or more of Americans that will not be subject to estate taxes, you may be in a position passing along even greater amounts to family and Christian ministries. If anything, the need for wise stewardship in developing your estate plan has increased. Just when you thought you could take something off of your to-do list, estate planning probably needs to go to the top of the list. (P.S. Keep an eye on the estate tax laws. The $5 million exemption is set to expire December 31, 2012.)
Stephen Mathis, CFP
Missouri Baptist Foundation