There has been a massive downturn for Estate Planners since 2012, especially for those with clients whose net worth is under $11mm. The life insurance industry has also reported major declines in sales due to the inability of agents to convince clients that potential estate taxes create the need for permanent life policies. These policies were easily sold in the past as a way to pay the tax on death because the estate tax affected most people in some fashion due to a $600,000 tax exemption amount that reigned for almost four decades. Even after the Federal exemptions elevated to a robust $5mm in 2012, New York’s decoupling maintained the death tax angst by keeping its exemption at $1mm.
Then in 2014, New York increased its $1mm exemption by skipping it up annually on a fiscal year to match the Federal numbers by 2019.[1] This unexpected legislation really put the nail in the estate planning coffin. As of 2016, bypass trusts in wills and life insurance trusts, once staples of every marital estate plan, are rarely desirable by average wealth clients. With access to so much information on the Internet, clients proactively read whatever their search engine feeds them about estate planning. They tell us about the simplicity of portability, and how basic wills would suit them just fine; and this is all based on the flawed concept that Congress has magically eliminated the need for planning since they are worth less $10.9 mm.
II. Background