Estate taxes often garner a lot of attention - particularly in an election year when the threat of raising taxes routinely becomes a political focal point. The estate tax, 40% at the federal level,^[1] aptly referred to as the "death tax," does have the potential to be quite devastating. However, it is important to put the estate tax in the proper context. Instead of worrying about how much the Government will take from taxpayers' estates when they die, taxpayers should focus on what they can do now to protect their assets.

In 2014, an estate is not subject to the federal estate tax until it has exceeded the $5,340,000 lifetime exclusion amount.^[2] For married taxpayers, the threshold is significantly higher, up to $10,680,000, thanks to the now permanent portability laws allowing a surviving spouse to use a first-to-die spouse's unused "Deceased Spousal Unused Exclusion Amount." As a result, terms like "death tax" garner media attention, but most third-party studies show that the percentage of estates exceeding the lifetime exclusion is small.

In reality, issues unrelated to taxes are more likely to negatively impact taxpayers' estates. Taxpayers, including business owners in particular, should focus on creating an effective transfer strategy and planning for the continued operation and control of the business after their passing. It is becoming increasingly more common to see estates wiped out by failing businesses instead of a levied estate tax.

Common questions taxpayers should be asking themselves include:

• Does my estate have enough liquidity to carry out distributions to beneficiaries, pay off creditors, pay any state inheritance taxes, or fund a buyout?

• Are my children protected through an established trust?

• Have I designated beneficiaries for all of my retirement accounts?

• Do I have a plan in place to efficiently close my estate after I die?

• Have I planned properly to minimize the impact of potentially having to file a Fiduciary Income Tax Return?

In light of the increased lifetime exclusion amount and related portability rules, these concerns should be front and center for taxpayers. Politicians may never advocate for more thorough estate planning, but that issue - not estate taxes - is one that deserves more attention.

_{^[1] Since January 1, 2005, there has been no Kentucky estate tax.}

_{^[2] This assumes that the lifetime exclusion has not been reduced by otherwise taxable gifts.}