Many Pennsylvania residents falsely believe that estate planning is only for the wealthy, and that families with moderate levels of income and assets have little need for such measures. According to a recent survey conducted by a major media outlet, even the wealthy among us fail to properly address estate planning needs. When it comes to the reasons behind this trend, some of the logic makes perfect sense, even if the outcome is flawed.
One reason why many with a net worth between $1 million to $5 million fail to create a solid estate plan is based on a type of "planning fatigue." In recent years, these individuals and families have gone through a wide range of shifts and concerns over how estate tax changes might affect the eventual distribution of their wealth. Each proposed or actual change in tax laws prompted a call from one's financial planner or estate planning attorney. After being concerned about the issue for a long enough period of time, many people simply threw their hands up in frustration and stepped away.
When the estate tax matter was finally resolved, the increase in the amount of one's estate tax-exempt wealth rose to the current level of $5.43 million. This led many families to believe that their primary focus within the estate planning process was no longer an issue. They failed to consider the various other protections that a solid estate plan can offer, due to having focused exclusively on estate tax matters for such a lengthy period of time.
As it stands, it is estimated that as many as 38 percent of individuals with wealth of $1 million or more do not have an estate planning package in place. For those in Pennsylvania who are included in that number, it may be time to sit down with an estate planning attorney and review the available tools. A comprehensive estate plan encompasses far more than simple estate tax issues, and having those protections in place can make a world of difference to loved ones when the time comes.
Source: CNBC, "Wealthy suffer from 'estate-planning fatigue'", Shelly Schwartz, June 29, 2015