Now that Congress has set a high trigger point for the federal estate tax for 2013, it only hits single people who leave more than $5 million behind, and couples can pass on more than $10 million tax-free—you might think you can scratch estate planning off your “to do” list*.
Not so fast! Estate planning is about a lot more than the federal estate tax.
Basically, it’s about removing the roadblocks that can stand in the way of getting your things to the people you want to have them, with as little hassle and expense as possible.
The number one barrier, of course, is the lack of a valid will that spells out your wishes. If you don’t write your own, the state will write one for you, which is probably not the best solution.
Next is the need for cash to cover the bills that must be paid before your assets can be distributed—your final expenses, for example, and any outstanding debts.
There’s more to think about, too.
Some possessions can be more difficult to pass on than others—it’s a lot easier to carve up a bank account among several heirs, for example, than a cottage in the woods. With proper planning, though, you could possibly save you and your family time, money and heartache.
Did you know that some assets go to heirs free of any income tax, but other parts of your legacy can carry a heavy tax burden? Or that giving property away while you’re still alive rather than passing it on via your will can be either a savvy move . . . or possibly a big mistake?
There’s a lot to think about, and there’s lots of help available. Putting together a solid estate plan is designed to give you confidence in your financial matters today . . . and in helping to ensure your wishes are fulfilled tomorrow.
This information should not be construed as tax or legal advice. Always consult with your tax or legal professional for details and guidelines specific to your situation.
*CCH Tax Briefing, January 3, 2013, American Taxpayer Relief Act of 2012