When I was growing up in Indianapolis, we would visit my grandparents in Clearwater every spring break. One year my parents treated us to a few days at Disney World, and we even stayed in the Contemporary Resort. That’s the hotel near the Magic Kingdom that has the monorail passing through its giant open atrium.
For a 12-year-old boy in 1974 the entire scene was incredible.
We had a blast in the park, too. After riding on Space Mountain, my parents wanted a more sedate experience, (I wanted to go on Space Mountain again, but was overruled,) so we hopped right into the Carousel of Progress. You may remember its catchy tune, “Now is the time…Now is the best time of your life…”
Thinking back, the Disney Imagineers really pegged the “future” family. Remember, this was 1974. The animatronic family of the future conducted video calls and used pocket computers to search for recipes.
Like many Disney songs, (think Supercalifragilisticexpialidocious) once you hear them, they stick in your mind for the rest of the day. “Now is the time” seems to be my mind’s theme recently, particularly because of what’s going on in our economy and in looking forward to the next election.
Consider that our government has spent trillions of dollars to keep us afloat during the coronavirus episode that’s not yet over. Our economy absorbs hit after hit, and we don’t know how this all pans out. As a tax and estate planning attorney, I can’t help but think no matter who wins in November our tax bills will be rising. Tax rates are at historic lows. With the enormous debt Washington accumulates, something must give.
The federal estate tax exemption is at an historic high. It won’t last forever, as it is scheduled to sunset in 2025. Depending upon the November results, it could sunset sooner.
So where does this lead us? For those with larger estates now is the time to conduct advanced planning. Strategies exist to minimize the size of your estate, even if you want to retain the income generated by the assets you’re planning with.
Unlike your foundational plan, such as a will or a revocable trust, most advance planning requires the use of irrevocable trusts. In other words, your foundational plan can always be changed, but when you embark on advance planning, it’s permanent. It can’t easily be undone.
But that’s nothing to fear if you have a Florida Bar board certified estate planning attorney on your team. Here, you’ll want to discuss your goals and concerns, then fashion a plan that wraps the best tax strategy around those plans. In addition to estate tax planning, income tax planning is also vitally important, as income tax rates are also likely to rise in the near term.
Most advance planning techniques take time to mature. Some strategies percolate over several years. But this can be a good thing for you and your loved ones.
Consequently, not only is it important to consider strategies because tax rates might change, but it’s also important to have as many years as possible in front of you to let advance plans mature, saving more money. All time low interest rates benefit as well. So long as the rate of return that your assets achieve over time exceeds current government interest rates, the better the savings for your loved ones.
Now is the time. (You’re hearing that song in your mind, aren’t you?) Don’t Mickey Mouse around, because environments this favorable won’t last forever. Hopefully we don’t return to 1974 inflation rates (11.4%!) which, combined with the interest rates at that time would make many advanced estate planning strategies difficult to succeed. Take advantage while you can.
©2020 Craig R. Hersch. Learn more at www.sbshlaw.com