Estate planning allows an individual to plan for his or her lifetime objectives and to provide direction about the disposition of his or her assets after death. Estate planning includes wills and trusts as well as powers of attorney and healthcare directives. An estate planning lawyer can be an essential ally in assuring that your estate planning goals are understood and carried out.
ESTATE TAX PLANNING
A federal estate tax is imposed upon the "taxable" estate of every decedent. Estate and gift taxes are combined into a single transfer tax by a unified rate schedule that takes into account both inter vivos (during life) and testamentary (after death) transfers in computing the amount of the potential tax.
Currently, each individual is entitled to an exclusion amount of $11.2 million dollars. When the value of an estate does not exceed the exclusion amount, there is no estate tax due. However, any portion of the estate which exceeds $11.2 million per person will be subject to an estate tax liability at the current rate of 40%. More advance estate planning techniques can help reduce this 40% burden.
Please feel free to call our firm today to schedule a consultation with an estate planning lawyer if you have estate planning-related needs and/or legal questions.
Since the applicable exclusion amount is available to every estate, tax planning may not be a major concern to a single individual. However, there are two major reasons why we recommend the use of a revocable inter vivos trust (commonly referred to as a "living trust") over a Will. Through the use of a living trust, you are able to avoid probate and still retain the maximum flexibility in disposing of your estate. Probate is the court supervised administration of a decedent’s estate. As with all governmental functions, it is accompanied by bureaucratic delays and additional expense. The avoidance of probate means:
• Your estate can be distributed within just a few months, rather than the 12 to 18 months that is needed to complete the probate process;
• Your estate administration stays out of public records and, therefore, remains private; and
• The additional costs incurred with respect to attorneys and executors is avoided. Through a court-supervised probate, both the attorney and the executor are entitled to receive a fee, determined by statute. By way of example, for an estate valued at $1,000,000, the attorney and executor will each receive a fee of $23,000 from the estate, automatically.
Because of the complexity and varying transfer taxes; carryover basis laws, including the “sunset” and “portability” provisions; GST tax changes and other estate planning considerations, consulting with a lawyer is of paramount importance.