Estate Tax

Currently, the Federal Government is scheduled to repeal the Estate Tax law in the year 2010.  However, unless Congress acts, the threshold will return to $1 million in the year 2011.  As of today, an individual may leave their heirs $1.5 million without paying Estate Taxes.  This number gradually increases each year until it reaches $3.5 million in 2009.  Wealthy individuals really must look at their options seriously to help their heirs avoid paying 45-50% in taxes when they pass away.  It's important for folks to remember to factor in life insurance policies when determining the total value of assets that may be passed on to an heir.  Life insurance policies can easily push one over the thresholds that are set to determine whether or not your heirs will owe an estate tax.  Obviously, avoiding taxes is one of the primary objectives of Estate Planning.  In the event you find yourself exceeding the $1.5 million threshold this year, you may want to consider giving your children financial gifts now using the money that pushes you over the $1.5 million mark.  Remember, each parent can give each child a gift of $11,000 each year without paying a gift tax.

In addition to avoiding the estate tax, you want to also work to avoid probate.  Your spouse automatically inherits everything that is yours due to the marriage laws in this country ( this is one of the primary benefits that same-sex couples covet about the "official" marriage bond ).  Apart from your spouse, designating your heirs as "beneficiaries" on your major financial assets ( i.e. 401K, bank accounts, etc ) will typically serve adequate to pass along these assets to your children.  However, it's good practice to establish a Living Trust to help avoid probate.