Once again, we find ourselves rushing to conclude all of the things we have left undone in the final weeks of the year. We trust you can relate. But rather than highlight the hurriedness of the season, we want to talk about the estate tax. Not the cheeriest of subjects for a holiday season—we admit—but in the news again this week and worth mentioning for a reason that will become obvious.
Most Americans currently do not have to pay any estate tax (sometimes called a death tax) when they leave property to others upon their deaths. This is because the current exemption from the estate tax is roughly $13,500,000. Estates worth less than that amount do not pay the tax. But for those “unfortunately” wealthy few, the estate tax generally takes 40% of every dollar over that threshold before the wealth passes to anyone else. The failure of this tax to capture as much of the revenue as it historically brought in was highlighted this week in a profile of the United States’s 10th wealthiest man. One quote in the story came from a law professor explaining in part how this has happened: “You have an army of well-trained, brilliant people who sit there all day long, charging $1,000 an hour, thinking up ways to beat this tax.” Other than the $1,000 an hour comment, he is referring to most estate planning lawyers.
Now before you accuse the lawyers of being the problem, we’d like to suggest that this is not a bad way to frame what we do for our clients in elder law cases. But rather than help the wealthy save millions or billions in taxes, we help the average person save tens of thousands in long term care costs. The rules for using government benefits to pay for long term care are no less complex than the tax laws, but the consequences of not knowing how those rules affect one’s ability to qualify hits those of modest means much harder than the estate tax hits the children of your average billionaire. As one of our colleagues puts it, “we use our powers for good”—and, to be clear, always within the limits of what the law allows.
One last thing: if you know someone who is serving as a caregiver during this season, you may want to consider a thoughtful gift. If so, we recently discovered that the Alzheimer’s Association has put together a list to help you.
This content is provided from The Senex, our bi-monthly e-newsletter for senior providers, written by Jeremy L. Pryor, Esq.
