Estate Planning: It’s About More Than Taxes, 08-31-2010
Written by The American Academy of Estate Planning Attorneys,
Compliments of Morris Hall
In 2010, contrary to a lot of people’s expectations, Congress allowed the one-year repeal of the estate tax to occur as provided in legislation that had been passed a decade earlier. Even if there had been no estate tax repeal, only a tiny number of people would have owed federal estate taxes. According to The Estate Tax: Myths and Realities, a study by the Center on Budget and Policy Priorities, updated in 2009, the estates of only 0.24% of people who died in 2009 were expected to owe any estate tax at all. That’s fewer than 1 in every 400 people!
Despite all the fuss, the estate tax repeal didn’t eliminate the need for estate planning. Why? Estate planning is about so much more than just taxes.
Estate planning is about making arrangements for your family’s future, not just after your death but while you’re still living. A well-thought-out estate plan can help:
Reduce the impact of disability
Minimize income and other taxes
Pass on your values to future generations
An estate plan can also shield your assets from your children’s creditors and ex-spouses, helping ensure your children’s futures. Without an estate plan, the legal system steps in and makes the decisions about what should happen to your assets and your loved ones. For example, if you die without an estate plan, state law, and not your preferences or your family’s wishes, dictates how your estate will be distributed.
This emotional drain on your family can be avoided with an estate plan. If you take the time to put a few basic documents in place, you’ll help ease the burden on your family in the event of your disability or death.
For example, with a Revocable Living Trust, you can pass your assets on to your loved ones without the need for probate. This means that your estate can be settled privately, without the need for court supervision and involvement. You can also use your Trust to establish a disability plan and eliminate the need for guardianship proceedings in case you become unable to handle your own affairs.
After you pass away, your Trust can still be there to reinforce the values you instilled in your family during your lifetime. For example, distributions to your children and grandchildren can be contingent on a college graduation, or funds from a Trust can be used to match income if a child or grandchild pursues certain defined altruistic professions.
A Health Care Power of Attorney lets you name someone to make medical decisions on your behalf if you’re injured or ill to the point that you can’t do so for yourself. With a Financial Power of Attorney, you can appoint someone to make financial decisions on your behalf in case of your incapacity.
There are many other estate planning documents that may be appropriate for you. A meeting with a qualified estate planning attorney from Morris Hall can help you put together a plan that’s tailored to achieve the future you want for your family.