What is the Federal Estate Tax? The federal government imposes a “death tax” upon your estate when you die if your estate exceeds the allowable exemption.  Ironically, it can be expensive to die!

What is the Federal Estate Tax Exemption? The exemption has changed over the last ten years, with the current 2013 exemption at $5.2 million per person. In the estate planning circles, the consensus is a state of surprise as the current exemption remaining the same as it has for the last few years. For most of us, our estate falls well below this exemption; however, the question is how long will this exemption remain at the designated rate.

What is included in an estate for federal estate tax purposes? An estate includes real estate, life insurance, retirement plans, annuities, bank accounts and personal belongings.

Is estate planning necessary if my total estate is under the Federal Estate Tax Exemption? The answer is most definitely yes! The time to start planning is now if you haven’t already begun; and it is also time to have an existing plan reviewed to capture the many law changes and asset protections for the surviving spouse and/or beneficiaries.

What type of planning should I have? In Arizona, a probate is triggered if you die with assets totaling over $50,000 in your name. If your estate exceeds $50,000 (see definition of “estate” above) your estate plan should consist of a Revocable Living Trust (RLT). With proper planning, your affairs will be handled by the person you choose should you become incapacitated and also when you pass away. The RLT is the best estate planning tool to avoid a costly Guardianship/Conservatorship (living probate)and death probate; as well as minimizing or avoiding death taxes.

Even though death taxes might not be an issue for most of us if the federal exemption remains high, there are many advantages through planning.  For example, with a single trust (single individuals) which avoids the living and death probate; and an A/B trust (married couples) which gives the surviving spouse creditor protection, divorce/remarriage protection and long term care spend-down protection over the assets titled to the B trust. Similar asset protections are available to the beneficiaries, regardless if you are married or single.

A properly drafted estate plan will save your loved ones from unnecessary heartache and great expense; as well as provide important asset protection.

 

What the Attorneys of Morris Hall Can Do For You:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down.  The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits.  Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.