RTS #011 – Don’t forget about Estate Taxes

Death and taxes, how many times have you seen those two paired together? Benjamin Franklin made them famous, but there is a reason we are still talking about them:

  1. They are both going to happen no matter what we do.
  2. They both have an impact on the people around us.
  3. They both can be influenced by proactive planning.

Lumping the two together from a planning standpoint can make it easy to focus on the numbers side of things. Income taxes come up every year and are hard to forget about, but people (Financial Advisors included) often discount the importance of planning for estate taxes because the federal exemptions are currently so high.

This is a mistake for several reasons. One, the tax code is written in pencil and can change at any time. We already know that the exemption amounts are scheduled for massive cuts with the expiration of the Tax Cuts and Jobs Act in 2026. Two, there are multiple states with relatively “small” exemption amounts (as low as $1,000,000 and others under $5,000,000). This can be even more complicated when people move later in life between states with different rules. And three, estate taxes are not the only reason for having an estate plan.

This week Anne Rhodes, Chief Legal Officer from Wealth.com, joined the podcast to share her thoughts (from years of incredible experience) on why Financial Advisors need to be thinking about and helping their clients with estate planning, even if their taxable estate is not over the federal exemption amounts. We’ve partnered with Wealth.com to make sure this topic is covered in detail, including how to take action on it, at the upcoming RTS Tax Planning Summit.

And for RTS Members, we’ve worked with Wealth.com to update and upgrade our Estate Planning reference guide that gives you a list of important considerations around Estate Planning as well as a map of the States that have their own estate tax exemptions separate from the federal rules.

What can you do about it?

Education on technical topics is critical. Whether that is listening to this week’s episode of the podcast, getting signed up for the RTS Summit (in-person and virtual seats still available), or finding other great resources on this topic, it takes a commitment on your part.

Education on its own is not value; there has to be action. It doesn’t have to be every meeting, but Estate Planning needs a place to live on your client meeting agendas. Like tax planning, estate planning is not one-and-done. There may be more that needs to happen up front, but this is a topic that has to be revisited.

Happy Tax and Estate Planning!

About The Newsletter

The tax code is 80,000+ pages and Google has 875,000,000 results when you search “Tax Planning”, so each week we are going to help you wade through all of that noise and get to the Relevant Tax Stuff.