Few people relish estate planning. After all, deciding how you want your assets distributed after you die can serve as an unnerving reminder of your mortality. But there are plenty of reasons to tackle the task with some enthusiasm:
- You get to name the people to whom you wish to give your assets and know that your wishes carry the word of law.
- You can arrange it so that taxes siphon as little from your pot of gold as possible.
- And you have the satisfaction of knowing that your financial affairs are in order and that you're not bequeathing a costly administrative nightmare to your loved ones.
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. An estate plan has several elements: a will, power of attorney, and an advance healthcare directive (medical power of attorney). For most people, a trust and life insurance also make sense. When putting together a plan, you must be mindful of both laws governing estates.Estate Planning Lawyer in California
Take an inventory of your assets. 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?
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.
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.Discuss Your Estate Planning Needs Today
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.
Taxation of estates is complicated. 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. However, this exemption may be partially used during your lifetime on gifts to avoid gift tax. 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.
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.
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.Contact a California Estate Planning Attorney Today
Contact our attorneys today so that we can help you with your estate planning needs.