Estate planning and probate are subjects that can profoundly affect people's lives, and yet they don't come up very often in conversation. One of the few occasions on which the popular news media will discuss the subjects is when there is a courtroom battle over a famous person's will. Another is when there is a political battle over the estate tax.
Partly as a result of this phenomenon, the estate tax is widely believed to be a much bigger deal than it is in reality. In fact, Texas has no estate tax and very few families are affected by the federal estate tax.
For years, opponents of the estate tax have called it the "death tax," while proponents have argued that it is an important way to combat unfair wealth inequality. The opponents have been winning. After a series of tax cuts over the past 20 years, the federal estate tax is a shadow of its former self.
After the massive tax bill in 2017, the federal estate tax exemption is now $11.4 million. In other words, a person who dies in 2019 can leave up to $11.4 million to heirs without the estate incurring any federal estate tax. Perhaps needless to say, there are not many people who will leave estates larger than $11.4 million.
According to the Tax Policy Center, only 1,890 estates were taxable in 2018. In 2013, when the exemption amount was $5 million per person, there were 4,687 taxable estates. Compare these figures to the numbers 2000, when the exemption amount was $675,000 and there were 52,000 taxable estates.
Maybe the federal estate tax is not something you have to worry about for your estate plan, and maybe it is. Either way, a skilled estate planning attorney can help you put together a plan to protect your assets and maximize the legacy you will leave behind.