Estate
Planning (Top 10)
1.
No matter your net worth, it's important to have a basic
estate plan in place.
Such
a plan ensures that your family and financial goals
are met after you die.
2. An estate plan has several elements.
They include: a will; assignment of power of attorney;
and a living will or healthcare proxy (medical power
of attorney). For some people, a trust may also make
sense. When putting together a plan, you must be mindful
of both federal and state laws governing estates.
3. Taking inventory of your assets is a good
place to start.
Your assets include your investments, retirement savings,
insurance policies, and real estate or business interests.
Ask yourself three questions: Whom do you want to inherit
your assets? Whom do you want handling your financial
affairs if you're ever incapacitated? Whom do you want
making medical decisions for you if you become unable
to make them for yourself?
4. Everybody needs a will.
A will tells the world exactly where you want your assets
distributed when you die. It's also the best place to
name guardians for your children. Dying without a will
- also known as dying "intestate" - can be
costly to your heirs and leaves you no say over who
gets your assets. Even if you have a trust, you still
need a will to take care of any holdings outside of
that trust when you die.
5. Trusts aren't just for the wealthy.
Trusts are legal mechanisms that let you put conditions
on how and when your assets will be distributed upon
your death. They also allow you to reduce your estate
and gift taxes and to distribute assets to your heirs
without the cost, delay, and publicity of probate court,
which administers wills. Some also offer greater protection
of your assets from creditors and lawsuits.
6. Discussing your estate plans with your heirs
may prevent disputes or confusion.
Inheritance can be a loaded issue. By being clear about
your intentions, you help dispel potential conflicts
after you're gone.
7. The federal estate tax exemption - the amount
you may leave to heirs free of federal tax - has been
rising gradually and will hit $3.5 million in 2009.
Meanwhile, the top estate tax rate is coming down. The
estate tax is scheduled to phase out completely by 2010,
but only for a year. Unless Congress passes new laws
between now and then, the tax will be reinstated in
2011 and you will only be allowed to leave your heirs
$1 million tax-free at that time.
8. You may leave an unlimited amount of money
to your spouse tax-free, but this isn't always the best
tactic.
By leaving all your assets to your spouse, you don't
use your estate tax exemption and instead increase your
surviving spouse's taxable estate. That means your children
are likely to pay more in estate taxes if your spouse
leaves them the money when he or she dies. Plus, it
defers the tough decisions about the distribution of
your assets until your spouse's death.
9. There are two easy ways to give gifts tax-free
and reduce your estate.
You may give up to $12,000 a year to an individual (or
$24,000 if you're married and giving the gift with your
spouse). You may also pay an unlimited amount of medical
and education bills for someone if you pay the expenses
directly to the institutions where they were incurred.
10. There are ways to give charitable gifts
that keep on giving.
If you donate to a charitable gift fund or community
foundation, your investment grows tax-free and you can
select the charities to which contributions are given
both before and after you die.
At
Penney and Associates, we are committed to providing
the best possible service so your law related needs
are handled with the utmost professionalism.
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