Client Development Update – Act Now To Maximize Unique Estate Planning Opportunities

Posted on 08. Jun, 2011 by SParker Admin in Uncategorized

Under the U.S. tax laws, gifts you make during your life, and the amount of your estate at death, are taxed as one  bundle under a “unified system.”  With the tax legislation enacted at the close of 2010, every individual has a $5 million exemption from the estate/gift tax. But we only have it for sure until the end of 2012. To most American families whose wealth doesn’t come near $5 million, this kind of talk is irrelevant or even absurd.  But for families of great wealth the $5million exemption may actually be woefully inadequate.  Wherever you stand on the wealth spectrum, using the exemption sooner rather than later is to your advantage.

To fully appreciate this government largesse, let’s put it in perspective. Prior to 2011, under previous versions of the same “unified” system, the top estate tax rate was 55% and the maximum exemption was $3.5 million. When these generous provisions sunset at the end of 2012, like Cinderella finding a pumpkin instead of a carriage at midnight, we’ll be left with a $1million per individual exemption and 55% estate tax rate.

Get Your Affairs in Order Now
So Your Loved Ones Have an Easier Time

If you think your estate may come near the million dollar mark, the time to plan is now. If you’ve been putting off writing a will, or signing a health care proxy or even giving a trusted friend or relative the right to make financial decisions for you if you become mentally disabled – take the time now to get your papers in order.

A lawyer colleague of mine, now in his seventh decade, was recently asked by his wife what she would do if something happened to him. He joked that she’d get everything anyhow. But her real concern, aside from the loss of her husband of 50 years, was how she’d track down where “everything was” that she needed to know about.

If you don’t get your affairs in order now, odds are you may leave your family with more difficulties than just the loss of you. How will anyone know that you have the safe deposit box key stashed in your tool box in the back shed, or that there is a stash of “survival cash” in a shirt box in your closet or that you actually did buy some term life policies in case you don’t make it through your kids’ college years.

I recently heard about a family who discovered their aging father had continued to pay for senior living expenses – having forgotten he’d purchased a long term care policy years earlier which would’ve covered the costs. After the fellow died, his family discovered the policy but it was too late to collect to collect on it. What a waste of resources!
It’s not that tough to get the important stuff together; it’s a lot easier than leaving a mess behind for a loved one to deal with. Take an inventory of what they’ll need to know – assembling the following (and letting them know where to find the list!) is a good place to start:

• Where your will or other testamentary documents (trusts, are (if you have them.)
•  The attorney, accountant, insurance broker and/or investment advisor who handles your business
• Location and identifying information of:
• Bank accounts
• Credit cards
• Outstanding loans
• Mortgages/home equity lines
• Retirement accounts
• Life insurance policies
• Cemetery plots or deeds
• A list of what you own (collections, art work etc.) that’s valuable – worth e.g. more than $1,000.
• Any documents of title concerning assets you own such as the deed to your home or title to your car.
• Insurance policies that you maintain on your life or anything you own.
• Identification of any documents where you are named beneficiary such as retirement plans, insurance policies or trust agreements.
• Documents pertaining to the following:
• Real estate deeds
• Tax returns
• Gifts made/gift tax returns filed
• Employee benefit statements
• Marriage certificates
• Divorce decrees/separation agreements
• Citizenship papers
• Adoption agreements
• Birth certificates
• Military discharge/veterans paperwork
• Loan agreements
• Business agreements
• Trust documents
• Partnership papers

Feel free to contact our office if we can help you get some of your back story and paperwork in order.