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ESTATE
PLANNING IS NOT JUST FOR SENIORS
An article by: Attorneys
David H. Ferber and Edward D. Beasley
Most
people think of estate planning as something of interest only to senior
citizens. While the vast majority of our clients are indeed seniors,
in reality estate planning is something that everyone should think
about.
YOUNG PEOPLE JUST STARTING OUT
Young people just starting out should definitely be concerned about
estate planning, especially if they have minor children. In a will,
you can specify whom you want to be your children's guardian should
you both die. While the court has the final say, your wishes will
be honored, unless there are compelling reasons not to do so.
If you do not specify whom you want as guardians, then the court will
appoint someone, with no guidance from the most knowledgeable person,
you! It is possible that there will be a fight over custody, either
by the in-laws, brothers and sisters, or other family members. Nothing
can be more unfortunate and tragic for your children than to have
their parents die, and then to be fought over, as if they were pieces
of property.
Depending on the size of your assets, a trust, in addition to a will,
might be in order as well. If you leave only a will, then the Probate
Court will have jurisdiction over your property until your youngest
child turns eighteen. With attorney's fees and probate bond fees so
high, far too much of your estate can be eaten up by administration
costs, rather than going for your children's support and education.
With a trust, you can be assured that 100% of your money will be used
for the benefit of your children, and will not go into the pockets
of an attorney and an insurance company.
A trust may be especially appropriate for young people with large
insurance policies. It is a fact of life that many young persons are
worth more dead than alive. That is, many young people have large
obligations, such as mortgages, student loans and car loans. However,
many young people, especially those with small children, often have
large insurance policies. What will happen to this insurance if you
both die? Without the proper beneficiary designation, it will go into
Probate, and may well end up being consumed by your creditors. With
the proper trust planning, however, you can assure that the money
will avoid probate and creditors, and will end up working for your
children.
YOUNGER PEOPLE WITH LARGE ESTATES
If your estate (or the combined estate of you and your spouse) is
over $650,000, then, on the second to die, your estate will be hit
by extremely high taxes. The Federal Estate Tax is no laughing matter--
it STARTS at 37%, and, depending on the size of your estate, can go
as high as 55%. Fortunately, with proper trust planning, a married
couple can double the tax free amount, and can avoid all federal taxation
up to $1.3 million.
Although most people do not have estates of this size, the amount
adds up quickly. When you calculate the size of your estate for federal
tax purposes, you have to include everything . Certainly the obvious
things are included, such as the house, car, bank accounts, and the
like, but other, less likely things are included as well. For example,
the death benefit (not cash value) of life insurance is included in
your estate. For many people, this can be several hundred thousand
dollars. IRAs, annuities, and other types of retirement accounts are
likewise included. So is personal property, such as jewelry, antiques
or gun or coin collections. If you have made any gifts during your
life of over $10,000 per year to any one person, those gifts are also
included in your estate for federal tax purposes.
If a married couple does have over $650,000, then, in order to save
taxes, they each need to make a special type of trust. In order to
do this, both spouses need to be alive and competent. If one spouse
dies prematurely, or becomes incompetent, then the opportunity is
lost. Therefore, no matter how young you are, if your estate is at
or close to $650,000, proper estate planning is essential.
PERSONS WHO ARE CONCERNED ABOUT
LIFE SUPPORT
Everyone, regardless of age, is subject to life threatening illnesses
or injury. Should this happen to you, then, unless you have signed
the proper legal documents, you will generally be placed on life support
mechanisms. Even if these machines are the only thing keeping you
alive, and you are in a vegetative state with no hope of recovery,
once the machines are turned on, it is virtually impossible to have
them turned off.
Most people do not wish to be placed on life support. If this is the
case with you, then you should consider signing a Living Will Declaration.
The Living Will is a document that states your intention to avoid
being placed on life support. The Living Will is ONLY used if you
are incompetent to make your own decision, AND two physicians (one
of whom is your treating physician) have determined that you are terminally
ill.
A document related to a Living Will is a Health Care Power of Attorney.
Simply stated, this is a document that can allow a spouse, child or
other trusted person to make health care decisions for you should
you become incompetent to make them yourself.
As you can see, there are many issues in estate planning that are
of interest to persons of all ages. |
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