The objective of this discussion is to review some of the myths and realities of estate planning. A number of articles have been written on the subject but let's see if we can't put a different spin on it by keeping it simple. By dispelling some of the common misconceptions, we will have a better understanding of how important it is to take positive action to keep our estate plans in order.
The Economic Growth and Tax Reconciliation Relief Act of 2001 (EGTRRA) threw many individuals for a loop when it came to estate planning. Tax laws are never simple but EGTRRA added a level of confusion rarely seen in advanced planning. For instance, between now and 2011 the federal estate tax is scheduled to decrease, disappear and then spring back to life. According to a Wall Street Journal article dated May 11, 2005, the "...current estate tax law puts estate-tax planners in an impossible situation...". With such uncertainty, some potentially damaging estate planning myths have surfaced. These financial "urban legends" stand in the way of prudent estate planning. Myth. Because of tax law uncertainty, you should avoid using life insurance trusts.
Estate planning attorneys can help you regardless of whether you want to draft a simple will for a small estate; to change an existing will so that it reflects a change in your financial status; to establish a living trust; or to set up an estate plan which includes a will, trust, and your health care and life support directives.
Your estate planning attorneys will help you determine, from the existing state of your financial affairs, including your investments, real estate holdings, and personal property, what your estate planning goals should be. They will help you get a realistic picture of the potential needs of your survivors, and elicit a clear understanding of your final health care desires.
Myth. Estate tax reform, or repeal, would signal the end of charitable giving. Giving to charity is emotionally rewarding. The IRS also gives you income tax breaks for charitable donations. You may utilize charitable giving strategies as a technique to reduce or freeze the value of your estate. Some people have bemoaned the possibility of estate tax repeal or reform, claiming that it will significantly reduce charitable giving. The argument posed is that if fewer estates are subjected to the estate tax, then fewer people will be inclined to make charitable gifts as an estate tax reduction strategy.
Concerning the issue of expense, in California the ordinary attorneys and personal representative fees are determined by statute, and are set out specifically in the Probate Code [California Probate Code 10800]. Extraordinary expenses may sometimes be charged, but the court must permit the added expense. Sometimes expenses may be saved if the personal representative waives his or her fee. If the executor or administrator is a family member, rather than an institution or professional, fees are often waived to save expense. In the final analysis, trusts are usually more expensive than wills to prepare, but wills administered through a court supervised probate are usually more expensive and time consuming than administering a trust. However, at least in California, there is another possible alternative: An expedited procedure for small estates (i.e., estates under $100,000, excluding exempted property) [California Probate Code 13100], which does not require opening and administering a probate estate. Therefore, in some cases opening a probate may not even be necessary.
The Economic Growth and Tax Reconciliation Relief Act of 2001 (EGTRRA) threw many individuals for a loop when it came to estate planning. Tax laws are never simple but EGTRRA added a level of confusion rarely seen in advanced planning. For instance, between now and 2011 the federal estate tax is scheduled to decrease, disappear and then spring back to life. According to a Wall Street Journal article dated May 11, 2005, the "...current estate tax law puts estate-tax planners in an impossible situation...". With such uncertainty, some potentially damaging estate planning myths have surfaced. These financial "urban legends" stand in the way of prudent estate planning. Myth. Because of tax law uncertainty, you should avoid using life insurance trusts.
Estate planning attorneys can help you regardless of whether you want to draft a simple will for a small estate; to change an existing will so that it reflects a change in your financial status; to establish a living trust; or to set up an estate plan which includes a will, trust, and your health care and life support directives.
Your estate planning attorneys will help you determine, from the existing state of your financial affairs, including your investments, real estate holdings, and personal property, what your estate planning goals should be. They will help you get a realistic picture of the potential needs of your survivors, and elicit a clear understanding of your final health care desires.
Myth. Estate tax reform, or repeal, would signal the end of charitable giving. Giving to charity is emotionally rewarding. The IRS also gives you income tax breaks for charitable donations. You may utilize charitable giving strategies as a technique to reduce or freeze the value of your estate. Some people have bemoaned the possibility of estate tax repeal or reform, claiming that it will significantly reduce charitable giving. The argument posed is that if fewer estates are subjected to the estate tax, then fewer people will be inclined to make charitable gifts as an estate tax reduction strategy.
Concerning the issue of expense, in California the ordinary attorneys and personal representative fees are determined by statute, and are set out specifically in the Probate Code [California Probate Code 10800]. Extraordinary expenses may sometimes be charged, but the court must permit the added expense. Sometimes expenses may be saved if the personal representative waives his or her fee. If the executor or administrator is a family member, rather than an institution or professional, fees are often waived to save expense. In the final analysis, trusts are usually more expensive than wills to prepare, but wills administered through a court supervised probate are usually more expensive and time consuming than administering a trust. However, at least in California, there is another possible alternative: An expedited procedure for small estates (i.e., estates under $100,000, excluding exempted property) [California Probate Code 13100], which does not require opening and administering a probate estate. Therefore, in some cases opening a probate may not even be necessary.
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Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Loans For Marriages - Get Ready To Tie The Knot You have full permission to reprint this article provided this box is kept unchanged.
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