While we all wish to live a long and healthy life, the reality is we never know when our lives will be cut short. There are some situations where an illness or condition is discovered, where people will still have the opportunity to work towards settling their affairs and plan for their deaths, but this is the exception. In all stages in life there are different reasons for estate planning: whether young or old, married or single, modest assets to substantial assets, with thought out estate planning you can ensure that your wishes will be carried out. Planning ahead can also protect your loved ones by saving them time, money, and unnecessary frustration. For a young family with a modest estate, we recommend term life insurance made payable to a trust. The trust can provide protection for your spouse and your children. Within this trust, you also have the option of putting special restrictions on your beneficiaries’ inheritance; for example, you have the option of staggering your children’s inheritance over their lifetime, rather than giving the money to them outright upon your passing. For single clients or married clients with no children, it is important to plan who you want to inherit your estate; if you do not decide for yourself, it will be decided by the government according to the laws of intestacy. For clients with assets that total over $1,000,000*, planning is especially important to avoid estate tax. The estate tax is scheduled to come back in 2011 with a $1,000,000 exemption and a 55% rate, meaning estates worth over $1,000,000 will be taxed at a 55% rate on anything over $1,000,000.
The bottom line is that you are never too young, old, poor or rich to benefit from estate planning. I have adopted the unofficial motto of “no one wants to do it, but everyone is happy when it is done”. I know it is not the most exciting use of time and money, but I see the calming change in demeanor when my clients sign their documents and leave the office. The calmness comes from the piece of mind knowing that their loved ones will be cared for in the event their life is cut short. If you have already prepared an estate plan that has not been reviewed in some time, or if you would like to learn more about recent changes in the law, you may benefit by having your estate plan reviewed and possibly updated.
*It is likely that with the Republican dominated election that the estate tax exemption will be increased. If Congress does not act, the exemption reverts back to the 2001 value of $1,000,000.