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ESTATE PLANNING isn’t the cheeriest of topics, but it’s one where a little care can help your family immensely—and some carelessness could cost them dearly. Here’s a look at some of the latest developments:

  • The federal estate tax exclusion is $11.58 million in 2020 and $11.7 million in 2021. Even when the exclusion was half of today’s level, just one out of every 600 deaths triggered federal taxes.
  • As of 2020, 17 states and the District of Columbia have either a state inheritance tax or a state estate tax, and one has both. You can find a list at sites such as McGuireWoods.comNolo.com and TaxFoundation.org.
  • In 2019, Congress eliminated the “stretch IRA,” which had allowed beneficiaries to draw down inherited retirement accounts over their lifetime. Instead, if an account is bequeathed by someone who dies after 2019, the beneficiaries must typically empty the account within 10 years.
  • The gift-tax exclusion is $15,000 in 2020 and 2021.
  • According to a 2020 survey for Caring.com, just 32% of U.S. adults have a will.
  • Fewer households will get a tax break for their charitable contributions, because their itemized deductions will be less than the new, higher standard deduction introduced by 2017’s tax law. What to do? Consider bunching two or three years of charitable contributions into a single year, perhaps putting the money in a donor advised fund.
  • Households contribute some $2,500 a year, on average, to charities, based on statistics compiled by the National Philanthropic Trust. Individuals account for 69% of all charitable gifts, followed by foundations (17%), bequests (10%) and corporations (5%).
  • Are you age 72 or older and interested in making charitable gifts? Qualified charitable distributions from an IRA were made a permanent part of the tax code at year-end 2015—and have become more attractive, thanks to the 2017 tax law, which boosted the standard deduction while curtailing itemized deductions.

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