One of the things that you should keep in mind when you are planning for the future is that everything is connected. Estate planning is by its very nature connected to retirement planning because your legacy is going to be impacted by your expenses and the overall financial decisions that you make after you retire. With this in mind, you have to get a handle on the expenses that you anticipate, evaluate your projected income, and create an intelligent, holistic plan for the future.
To this end it is a good idea to be aware of the goings-on in Washington that may have an impact on senior citizens. Right now there is a congressional super committee in place that is hatching a plan for reducing the federal debt by $1.5 trillion over the next 10 years.
A lot of people are not aware of the fact that over a third of federal spending goes toward funding Social Security, Medicare, and Medicaid. All of these programs are relied upon by senior citizens. So if the super committee has to make cuts, these programs may be in the cross hairs.
Another thing to consider with regard to austerity measures is the future of the estate tax. As the laws stand at the present time the estate tax exclusion is going to be reduced to $1 million in 2013, and the rate of the tax is set to rise to 55%. Because of the fact that we are indeed in debt, it may be difficult for people who are in favor of a reduction in the estate tax to make their case, especially when they may be pushing for cuts to these popular programs for seniors at the same time.
These are indeed interesting times in the estate planning community and there is a good bit of uncertainty regarding the future of the estate tax and entitlement programs for seniors. The best way to proceed is to work with an estate planning attorney to devise an intelligent and informed plan and be prepared to make adjustments as relevant changes come down the pike.
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- When Should You Use an Irrevocable Trust? - June 24, 2020
