As another year draws to a close and clients find themselves thinking of the future, perhaps one New Year’s resolution will be to get around to estate planning. Many procrastinate because of doubts about the status of the estate tax, which is scheduled to disappear in 2010 but, unless Congress takes action, will return at full strength in 2011. Doubt about how to cope with such a shifting tax landscape adds to people’s natural reluctance to contemplate the subject.
Ironically, however, according to Patrick Smith, The Hartford’s VP of estate and business planning, the more their net worth has increased, the more concerned clients become about the effects of estate taxes on their plans. Yet that still doesn’t seem to be enough to spur some of them to action, change or no change.
While not so long ago it seemed all but certain that after disappearing in 2010, the estate tax might finally be eliminated permanently, that outlook has changed, says Smith. While he adds that most observers believe Congress will raise exemption levels and lower the bracket, there is the chance now that a ballooning deficit, funding needs, and the effects of the AMT on middle-class families may combine to retain the tax at its 2011 reversion level–a tax bracket of 55% and an exemption of only $1 million.
According to a survey conducted by The Hartford in September, the greater the affluence of the respondents, the more concerned they are about both wealth transfer and the impact of the estate tax on their assets. The survey collected responses from 750 individuals whose income ranged from $150,000 to over $200,000, with net worth ranging from less than $1 million to more than $5 million. Of the respondents, 70.3% had more than $1 million in assets. Seventy-three percent of those with $5 million or more in assets were more concerned about the estate tax’s impact on their wealth transfer plans than they were a year ago.