BREED LAWEstate Planning
Everyone should have a will. Contrary to popular belief, estate planning is not something reserved for millionaires, rather it is something that – unfortunately – will become an issue for everyone at some point in life. Taking the time to think about and plan out how you want to pass on your legacy and have your wealth preserved will save your loved ones unquantifiable heartache and stress in the long run. We have been working directly with clients for decades to create a sensible and tax-efficient plan tailored to their wishes. No estate plan is too small, and we are here to help you put together an estate plan that is right for you.
What Encompasses Estate Planning?
The starting point and backbone of any estate plan is a valid Last Will & Testament. This is the document which will be admitted to probate at the local court in which you die domiciled. It will express your last wishes and requests and how you want your estate divided. Even if you do not have a large estate, it is still well worth the time to have a will, as failing to do so could have unintended consequences, such as allowing estranged family members to inherit from your estate.
Equally crucial to creating a will is having assets titled properly and the correct beneficiary designations in place. An “estate” only consists of property titled in the name of the person at the time of their death. Joint property with rights of survivorship passes automatically to the survivor upon death and the same goes for any asset which names a beneficiary. Children can be in for a rude awakening when they read their parent’s Will and think all property will be divided evenly, only to find out that a long-ago created retirement account named only child as a beneficiary, thus disinheriting the other children.
Thinking about how to title and to whom assets should be left is just one piece of the puzzle. Tax laws are fluid and consideration must always be given to estate, gift, capital gain and inheritance tax issues which may arise. Being able to proactively anticipate and plan for such issues can end up saving heirs thousands of dollars. Often, as a way to mitigate or alleviate taxes, setting up a trust can be a helpful tool. For more information regarding trust formation please visit our Trusts webpage.
Setting up an estate also encompasses planning for incapacitation and ensuring necessary and timely decisions that will impact your life can be made. A General Durable Power of Attorney allows you to name an Agent to act on your behalf with respect to any and all financial decisions. Of course, such authority can be limited and tailored as needed. Similarly, a Medical Power of Attorney & Hippa Authorization form names an Agent to make any medical decision on your behalf while you are incapacitated and ensures that any hospital or medical provider will communicate with that Agent and release medical documents/records as requested. Finally, a Living Will – also colloquially called the ‘pull the plug document’ – sets forth your wishes regarding life support and being kept alive artificially.
It is a good habit to review your estate plan periodically. Key events which may cause your plan to change include:
- Death or disability of a beneficiary of your will;
- Birth of a grandchild;
- Divorce;
- Change in tax laws;
- Purchase of a secondary residence;
- Financial windfall;
- Selling a highly-appreciated asset;
- Starting up or partnering in a business.
If you would like more information regarding setting up or reviewing your existing estate plan, please feel free to contact us to arrange a free consultation. We have offices in mid-town Manhattan and Wayne, PA and will make every effort to accommodate your needs.
A: It is a strategy to coordinate your assets and documents to assure your intentions are carried out after you are gone, with a goal of minimizing costs and taxes and with the least administrative delay.
A: This is ill-advised. Doing so subjects everything you owned to the probate process, which increases costs and seriously delays the receipt of assets by your heirs.
A: This is generally permissible, as there is no limit on the amount spouses can gift or leave to one another tax-free. That said, this is not the best option for larger estates as taxes may be owed after the death of both spouses, and the better course of action is to pre-plan while both spouses are alive.
A: Because your named executor may not want to serve, or may pre-decease you, it is a good practice to name at least one alternate executor. Otherwise, an interested party will need to petition the court to be appointed.
A: Every person can gift up to $15,000 per year ($30,000 per couple) to as many people as you want, tax free. For gifts above that threshold, you are required to file a gift tax return and any excess will count towards your lifetime estate and gift tax exemption, which is currently $11.4 million.
A: Estate, inheritance and/or income taxes may be owed. The type of tax and whether it is owed varies on a Federal vs. State level, and varies from State-to-State as well. Successful estate planning focuses on minimizing all costs, including these taxes, and preserving as much wealth as possible.