With the doubling of the federal estate tax exemption levels, a substantial number of wealthy families will no longer need to pay the tax. There are a number of very valuable implications for these families. Also, for many wealthy families who will still need to pay a federal estate tax, there are also steps they might want to consider.
While some professionals argue that the federal estate tax will come back sometime in the future at lower exemption levels, the wealthy – including the super-rich – are already starting to turn to their advisors to restructure their estates to benefit from the new law.
According to Pat Rufolo, Chairman of the Private Client Services Group, McElroy, Deutsch, Mulvaney & Carpenter, LLP, “For families who no longer have to pay federal estate taxes, revisiting their estate plans is probably a very good idea.
In working with our clients who no longer need to pay this tax, we’re seeing many ways to make their estate plans more efficient, less complicated, and considerably less costly for their families in the long term.
For example, one area we’re finding tremendous cost savings concerns the life insurance premiums they’ve been paying for coverage they now no longer need.”
“If there isn’t a need for life insurance to pay estate taxes, then the issue is how clients should best unwind or modify their existing life insurance policies,” says Frank Seneco, president of the advanced planning firm, Seneco & Associates.
“The best approach is dependent on the specifics of each situation.
Some possibilities include life settlements, converting existing policies into private placement life insurance policies, and adjusting the death benefit thereby lowering the premiums.”
“In deciding on what actions to take, it is important to remember that other taxes might impact the wealth holder at death such as state estate taxes.
Additionally, the use of various sophisticated planning strategies can likely provide many of the wealthy with solutions enabling them to achieve their estate planning goals with much less expensive complexity,” says Rufulo.
The new tax law is highly advantageous to the wealthy in numerous ways.
By reexamining and reworking their estate plans, many of the rich and even the super-rich will be able to use some highly cost-effective solutions to ensure their loved ones will get meaningfully more of their wealth at their death.
