As we approach Thanksgiving and reflect back on those first settlors, you may wonder how we got to where we are today in terms of landownership, transitioning wealth and providing for the next generation.
The first formal laws related to estate planning date back to 6th century Rome. The Roman laws allowed a citizen to transfer property after death if the transfer was communicated (could be either written or oral communication); however, the authorities had to approve the transfer. Soon after, England began to allow these same land transfers as long as it was approved by royalty.
In the 12th century, it became commonplace to transfer wealth to the eldest son and approval by the state was no longer a requirement. It was not until the 16th century that landowners were able to create a type of document similar to today’s Last Will and Testatment and choose to pass property to anyone they wanted.
These rules carried over from England to the colonists who settled America. Over time, each state legislature drafted laws involving intestacy (dying without a will), requirements for a will to be valid, allowing other estate planning documents such as power of attorney documents and living wills and established laws regarding trusts.
Along with the ability to plan for your asset distribution through a proper estate plan, the government realized in 1797 that these transfers could be taxed and provide revenue for the federal government. The Stamp Act of 1797 imposed the first estate tax to help fund the Navy for a temporary amount of time. It was repealed and then reenacted to help fund wars up through World War I. At that time, Americans realized they could avoid this estate tax by gifting assets to family members prior to death. In 1924, Congress imposed the gift tax to counteract this strategy.
While the estate tax was initially created to help fund wars, after World War I, it became a permanent tax with everchanging terms. The rates vary as well as the exemption amounts. With each new administration, these laws seem to be impacted. At Stouffer Legal our attorneys stay up-to-date on the latest estate and gift tax laws. To set up a consultation to learn how these laws can impact your estate plan now and in the future, contact us today. You can schedule an appointment by calling us at (443) 470-3599, emailing us at office@stoufferlegal.com, or register for an upcoming free webinar using the link below:
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