The post-2012 marketing by lawyers, CPAs, and financial institutions trumpeting estate tax planning continues to focus too heavily on the top 1% of potential clients. That is, on clients whose net worth is well above $10 million. Remember, the estate exemption for each spouse under current federal law is an inflation-adjusted $5.0 million. Therefore, a combined $10 million exemption for the great mass of married couples eliminates the threat of estate tax as the primary feature for their trust & estate planning.
By contrast, I believe for most of us the more important feature needs to be defensive planning. This centers on asset protection, preservation of assets, and elder law planning (especially in the event of costly nursing home care). This defensive planning also helps reduce expensive legal fees and clean-up expenses down the road in the absence of this planning.
As a related aside, I have to admit the following recent New York Times opinion by David Stockton, who was Ronald Reagan’s budget director, gave me pause to consider, as I do again and again, the importance of defensive planning for our protection and for our families. Click here for this Stockton NYT opinion.