Changes in the landscape of estate tax legislation has many elderly individuals in Boston wondering what they should do about their estates. The major changes that are expected to occur will affect the current tax exemption threshold for estates by decreasing it from $5.12 million to $1 million. In addition, the maximum tax rate on estates will increase from 35 percent to 55 percent, a staggering jump that can leave poorly thought-out estates owing a hefty chunk to Uncle Sam.
One of the most important parts of an estate plan is determining who will be in charge of your finances when you become incapable of directing them yourself. This is something that senior citizens in Boston should seriously consider, especially since there have been so many well-publicized issues with conservatorships in the past. Though many of those are related to celebrities and their estates, a former university professor is at the center of a conservatorship controversy that is currently ongoing.
If estimates are right, many people will be in need of a certain type of assistance. That type of assistance is long-term care, and experts believe that as many as 12 million older Americans will need such services in 2020. This means that the elderly in Massachusetts should begin preparing for the expenses that come with such care so that loved ones are not left with the emotional and financial stress of care as they age.
Many in Massachusetts believe that estate planning is only for the rich. This is not the case, though it may seem to be. According to some experts, this is because many estate planners focus on the estate tax exemption rate, which currently gives individuals a level of asset protection that will likely not be seen in the near future. This year, the estate tax exemption rate is $5.12 million, meaning that any estate valued lower than that is exempt from estate taxes. This rate is scheduled to expire at the end of the year.
Estate taxes can cause a large amount of an elderly individual's estate to disappear upon her or his death. Any nonexempt portions of an estate can be taxed and taken by the government, forever leaving the reaches of the loved ones that many in Boston want to see their wealth bequeathed to. Tax minimization planning is a way to make sure that this is avoided.