Estate Planning

Estate Planning - Why It Matters

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With all of the legislative hoopla I got off track on my blog series about information obtained from the Federal Citizen Information Center. Let’s pick up with Estate Planning this week (you can read one of our earlier discussion about Estate & Funeral Planning here).

As a little girl, I thought that an estate sale was another name for a garage sale, only for people who were really rich. It wasn’t until much later that I understood that the person had actually died, and even later still that their family may have had to sell a lot of their loved ones possessions in order to pay taxes. I now of course understand that estate planning is not only for the wealthy, and adding up all of your assets can really be an eye-opening experience. Between your home, investments, retirement savings, and life insurance you may come to realize that you are like most people, worth more dead than alive. (I’m joking, don’t get upset.)

The Federal Citizen Information Center has a free brochure on Estate Planning with all kinds of wonderful nuggets of information. It’s really something that I wish would be required reading for anyone over the age of 30. Like most things in life, Estate Planning, is heavy on the planning part. But do you really need to worry about this? The short answer is, “Yes.”

The brochures cites that about half of all Americans die without a will. So what happens in that case? The court system steps in to distribute your property according to the laws of your state, which may or may not coincide with your final wishes. Although unlikely, the state can even claim your estate for itself. Here’s short list of reasons that you should consult with an attorney when creating a will:

• You expect to own estate tax upon your death.

• You think your kids or beneficiaries will disagree on what should be done.

• You have children from more than one marriage, or from a blended family.

• You own property in multiple states.

• You want to establish a trust.


The IRS states that estate taxes in 2008 on an amount of $2,000,000 can be up to 45%! So how can you avoid that? (Even if you’re worth less than $2,000,000):

• Give away assets during your lifetime.

• Using the marital deduction, if the bypass trust or credit shelter trust is not a better option.

• Use a bypass trust or credit shelter trust. This can provide income to the surviving spouse.

• Charitable gifts to qualifying charities are not taxed under most circumstances.

• Life insurance trusts can be designed to keep the proceeds of the policy out of your estate and provide a cash source for your estate.


Here’s a list of reasons that you may have to update your estate plans:

• The value of your assets changes significantly.

• You marry, remarry, or divorce.

• You have a child or new grandchild.

• You move to a different state.

• You need to change the executor of your will.

• One of your heirs dies.

• Your children reach age 18.

• The laws affecting your estate change.


The one thing the brochure advises that I wouldn’t recommend is that you visit the IRS website. I’ve been on that site before and it’s a mess, full of downloadable forms that you can use, it’s unorganized, etc. That’s when the price of an attorney is well worth it.
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