Wills, Probate, Taxes & Estate Planning
Posted on May 1st, 2012, by iMinerva
You know the old Mark Twain saying, “There are only two things you can depend on, death and taxes.” Even more dependable are the death taxes your estate is subject to. If you haven’t planned for the inevitable, it’s inevitable that your family will lose more than just the pleasure of your company.
Life is complicated and the transfer of wealth upon our death, regardless of our age or family situation, can become a nightmare. I’ve heard friends say, “Oh, we hold everything in joint tenancy.” Or, “We have a will that designates our wishes.” Not a sufficient plan. A will may identify who gets what but before that can happen, all of your assets will have to go through the probate process…which can require a year or more to settle. Probate also makes public all of your assets and the dictates of your will…opening the door to those who want to make a claim or contest your wishes.
Estate planners always recommend a revocable living trust giving you control of your assets while you’re alive to enjoy them and following your death when it’s time to share. It also protects you should you be incapacitated and unable to make decisions on your own.
There are many reputable law firms who can assist you in your planning. Talk to your financial advisor or local banker for recommendations in your area or check out the National Academy of Elder Law Attorneys, Inc at www.naela.org.
Nationally recognized financial expert, author, columnist and a founding member of the Chicago Board Options Exchange, Terry Savage has an excellent discussion on estate planning in her book, The Savage Truth on Money. She lays out the facts and options in a clear and concise explanation that will quickly convince you there’s no time like this minute to start to organize your plan.
Here are a few points regarding current federal estate taxes:
- *An estate worth more than $5 million will pay an estate tax at a 35 percent rate. This is scheduled to expire in 2012 with the exemption reverting to $1 million and the top tax rate going to 55 percent.
- *State taxes may not always coincide with federal rates and exemptions.
- *Estate taxes are due and payable within nine months from the date of death.
- *During your life, you may “gift” $13,000 per year to any number of family and friends without paying taxes on it.
Don’t be overwhelmed. There are wise professionals to walk you through the planning process. I’m very grateful that I took care of this for both myself and my mother several years ago.
Three things to remember:
- *Don’t procrastinate. Start the process now.
- *Talk to your family about what you are doing (details aren’t necessary) and provide your attorney’s contact information.
- *Update your plan every few years to reflect changes in circumstances, economics, family feuds or new passions.
Words of Wisdom“I feel very adventurous. There are so many doors to be opened, and I'm not afraid to look behind them.”
by Elizabeth Taylor