Estate planning is a broad subject that includes figuring out what your estate (assets) consists of and when and how you should dispose of those assets to the best advantage. Estate planning requires an understanding of law, taxes and finances.
Some lawyers have the experience to take care of all of your Estate planning needs. Others may bring in certified financial planners, accountants and insurance agents to put together the best plan for you. It is also possible to start with a certified financial planner or accountant who will bring in a lawyer and may bring in an insurance agent to complete your estate planning team.
You should seriously consider Estate planning:
- To protect assets from being squandered by a relatives after you pass away.
- To protect your assets should you or your spouse need long-term nursing home medical care.
- To preserve your assets for future generations such as your grandchildren or great-grandchildren.
- To minimize estate expenses such as probating your Will.
- To minimize estate taxes.
- If your estate is worth about $1,000,000.00 or more. Given the price of houses these days, you might be surprised to find that your estate has grown into that range.
To protect assets from being squandered by a relatives after you pass away.
One of the most important goals of estate planning is to make sure that your assets are used to help and protect the ones you love. This can be challenging when someone you want to protect is not able to handle their own affairs or manage money due to age (young or old), disability, incompetency or lifestyle. By recognizing that that person will need help in managing their finances, you can set up a trust during your lifetime or after your death as part of your Will. Such trusts can protect your beneficiary by preserving their Medicaid eligibility, protecting the trust from creditors and even passing the remainder of the trust to persons you designate.
To protect your assets should you or your spouse need long-term nursing home medical care.
We live in a medically advanced society where life saving and prolonging treatment is available, but at a high cost. We are living longer, going to doctors more and relying on medications with skyrocketing costs. Nothing has more potential to eat away the assets you built than long-term medical costs. Medicare, for example, covers at best only a few weeks of Nursing Home costs which can easily run more than $8,000.00 per month and even then only under limited circumstances. The two main ways to protect your estate from these costs is through long term care insurance and Medicaid Planning.
To preserve your assets for future generations such as your grandchildren or great-grandchildren..
For some people it is important to pass their assets to their grand-children and beyond skipping their children completely or in some part. This is called generation skipping. This can be quite common when your children are financially self-sufficient, estranged, disabled, or incompetent. A combination of Will provisions and trusts can help you achieve what you want for your estate. This, however, must be done very carefully since there your estate can be hit with a skipping tax of 55% on top of other estate taxes.
To minimize estate expenses such as probating your Will.
Your estate planning (or lack of estate planning) will determine the cost of disposing of your assets after your death. There are many tools that can be used to help minimize these expenses. These can include putting assets in joint accounts with someone else, gifting assets during your lifetime, and setting up trusts during your lifetime or through your Will.
To minimize estate taxes..
In 2009 the level at which an estate began to be taxed was $3,500,000.00 on the Federal level and $1,000,000.00 on the state level for those who died New York State residents. If a non- resident of New York State died the owner or real estate and/or certain other property located in New York State with a value in excess of $1,000,000.00 New York State imposes an estate tax on the assets of such a non-resident as well.
The estates of those dying on or after January 1, 2010 and on or before December 31, 2010 will not be subject to Federal estate tax but are still subject to New York State Estate Tax. There are also changes in the basis rules with respect to property passing from the estates of those who pass away in 2010. An explanation of these so called carry-over basis rules is beyond the scope of this Guide.
However, the estates of those dying on or after January 1, 2011 will be subject to the Federal Estate Tax. When the current estate tax law was written it called for the old estate tax levels (starting with estates of $5,000,000.00 for Federal taxes and $1,000,000.00 for New York Taxes) and tax rates (up to 55%) to go into effect on January 1, 2011. It is likely that changes will be made to the Federal Estate Tax by Congress in the very near future.
The point is that estate tax law can change rapidly and quietly. Your Estate Planner can help keep you up to date on estate tax law and what changes you may need to make to your estate plan so that your estate pays the least amount of taxes.
If your estate is worth about $1,000,000.00 or more.
The size of your estate is not always the most important reason to have an estate plan done. Once the value of your estate reaches the $1,000,000.00 mark, however, you should consider getting some estate planning. Depending on the state of the estate tax law at the time of your death, there may be very simple ways to maximize the tax credits you and your spouse can take.
It is not recommended that you try to do your estate planning by yourself. Your best bet is to seek the advice of an attorney who is experienced in the field of estate planning/elder law/Medicaid planning. You should also consider consulting a certified financial planner or accountant. If you are going to try to do the estate planning on your own, it is strongly recommended that you study as many books as possible on the subject and attend seminars. While attending seminars, however, be careful that it is not just an attempt to sell you some product such as an expensive life insurance policy.