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Even
if you like dealing with financial matters, you may not relish the idea
of estate planning. But reviewing your situation from time to time is
the best way to make sure your family and other loved ones will be protected.
Start with the following six questions.
- Do you have a will? Many people don’t. But a will is the
basis for an estate plan. It provides for distribution of your property,
designates a guardian for any minor children you have, and appoints
an executor (or personal representative) for your estate. In the absence
of a will, state law and the courts will make these decisions for
you.
- Should your estate plan be updated? A revision may be in order
if you marry, divorce, have a child, move to another state, start
a business or take on partners, or acquire substantial new assets.
A review is also a wise idea if your executor or beneficiary has died
since you formulated your plan.
- Have you considered the potential impact of taxes? Federal estate-tax
laws are in a period of transition. This year, taxable estates worth
up to $1 million generally are not subject to federal estate tax.
By 2009, the exemption will increase to $3.5 million. In the year
2010, the federal estate tax is repealed. But it will be back in full
force in 2011 unless the repeal is made permanent. If you did your
estate planning before these changes were enacted, you should have
your plan reviewed by a tax professional. It is important to look
at state law as well.
- Will your spouse receive all your assets? Under the federal tax
law’s marital deduction, all assets you leave to your spouse
generally pass estate-tax free, no matter how large your estate. However,
this can limit your planning options and may ultimately result in
unnecessary estate taxes because it “wastes” the effective
exemption available to your estate. Proper planning can avoid this
result.
- Do you have a business succession plan in place? Planning for the
transfer of your business interests and for the payment of any estate
taxes that may be due will ensure that your business survives without
threatening your family’s financial security.
- Have you always assumed estate planning is only for the wealthy?
Even a small estate may benefit from planning. You may want to arrange
for someone to manage assets for minor children, your spouse, or any
other heir who may need financial guidance.
Please call on us for assistance in reviewing your estate plan.
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