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A-Z of Estate Planning

Posted on May 14, 2018 in Firm News

V – “V” standsfor Valuation of theestate.  The VALUATION of your estatewill determine whether or not it will be subject to tax.  Of course, there are vehicles, such as giftsto charity, whether at death or before that can help reduce exposure to tax, itis the final value that will determine how much tax, if any, that will be due. Itcan be the case that an estate VALUE is unfairly high due simply to the factthat a person died on a day that, for example, the stock owned by the decedentwas unusually high on that date. Fortunately, the Internal Revenue Code allows a trustee to choose aVALUATION date six months after the date of death, thus, perhaps, increasingthe chance of a more favorable (less tax heavy) VALUATION for the estate.

W – “W” standsfor WILL.  Sometimes formallycalled “LAST WILL & TESTAMENT”, your WILL (very much like a living TRUST) isa written set of instructions for how you want your assets distributed at yourdeath.   Once again, one of the maindifferences between a WILL and a TRUST is that the administration of a WILL isgenerally required to go through the public PROBATE process, while a TRUSTadministration is typically handled privately.

X – “X” standsfor GENERATION X.  Typicallyconsidered be those born after the Baby Boomers, this generation, which began in1961 and ended around 1981 are reaching middle age now, and if they have notalready, should very seriously consider putting their estate in order. It isreally never too early to begin estate planning, even if it is obtaining a lowpriced life insurance policy and having a simple WILL when you are in college,or soon thereafter.

Y – “Y” standsfor YOU and YOUR.  A well thought outestate plan, which has been put in place will put YOU at ease knowing YOURfamily and beneficiaries are provided for and will not have to pay for orstruggle with an incomplete estate.

Z – “Z” stands for ZERO. The goal of many individuals is to have their estate pay ZERO taxes at theirdeath.  Until the recent Trump tax cuts, this was far more difficult evenfor modest estates.  Now, and until the year 2025, a single person canleave his heirs over $11 million dollars and pay ZERO tax on thetransfer.  Individuals leaving in excess of $11 million dollars, can mostdefinitely still benefit from estate planning, greatly reducing the tax owed attheir death.