People are asking me constantly about the Tax Reform Act. How is it going to affect their estate, their income, and assets? We now know what it intends to do. Don’t forget the unintended consequences of legislation. As an estate planner, I can tell you my focus is on the estate tax. The bill will completely terminate the estate tax, but that will not happen until 2024.
Let’s go back. The estate tax was created in 1797. We have had it a very long time. We did not get a personal income tax until 1913 when it was ratified and passed. It was the 16th amendment of the constitution that made the personal income tax. It was unconstitutional to have personal income tax until we amended the constitution to say it was not. We are probably never going to get rid of the personal income tax, but since 1797 we have gotten rid of the estate tax a dozen times. It has been resurrected thirteen times. Even if we get this estate tax completely terminated again, there is no guarantee that it won’t come back. I think a reasonable person would say that in 4-8 years it will come back again. For those of you saying, “I can just live until 2024 and everything will be fine,” that is wishful thinking. You have to plan for the worst and hope for the best. If you plan for the worst, you will be covered either way.