As a huge transfer of wealth in the U.S. thrusts more Americans into the business of estate planning, people are demanding a change in tax laws and discovering charitable strategies to avoid them, Newsweek reports.
Boston College researchers John Havens and Paul Schervish estimate that, between 2018 and 2052, the value of American estates surge to between $29 trillion and $119 trillion.
As wealth increases, middle-class families who previously left simple wills will have to engage in more elaborate estate planning.
As a result, more Americans are focusing on estate tax law, which currently requires estates worth more than $675,000 to pay up to 55 percent in taxes.
By 2006, the law – which was liberalized in 1997 – will make estates valued at up to $1 million tax-exempt.
Claiming the law penalizes family businesses and discourages savings, opponents say the estate tax should be cut more or abolished altogether. Supporters of the tax say it protects America from becoming a land of inherited wealth, Newsweek says.
As the debate rages, individuals turn to charity to avoid estate taxes. Schervish and Havens of BC’s Social Welfare Research Institute say people with estates of less than $625,000 leave 5 percent to charity, and people with estates of more than $20 million give 41 percent.
“Among the super-wealthy, there’s a tax aversion by progressives and conservatives alike,” Schervish told Newsweek. “They think they can do better with their money than Uncle Sam.”
While America’s richest individuals give through major gifts or family foundations, the middle class gives through bequests and charitable trusts, Newsweek says.
In addition to avoiding estate taxes, donors find gifts make a statement about their life’s values.