:: Legal Services : Estate Planning

 

Everyone should have a will. Wills are not just for the wealthy. Your will tells the world, and, most importantly, the court, where you want your assets to go and how. It also tells your personal representative how you want to be buried or cremated and how you want the expenses handled.

Younger couples think they don't need a will, when, often, they need a will more than some older individuals. This is because, while they may not have many assets, they often have young children that should be provided for in the event of death of both parents. Couples may find it difficult to select a guardian for their children, but scarier still is no provision at all. Most of the time, the judge will follow the nomination in the will. Only if there is good reason not to follow the request will a judge overturn your designation.

Estate planning includes many things, not just a will. Proper estate planning includes a will, a health care directive (that designates your choices in the event of serious illness) and a power of attorney.

You should have a good idea of the extent of your assets in order to establish your estate plan. Your assets include your savings accounts, CDs, investments, retirement savings, insurance policies, and real estate or business interests. If you have minor children, you will need to decide who you want to care for them and who you want to distribute the money for their care (that can be a different person or entity).

Currently there are changes regarding the federal estate tax exemption (the amount you may leave to heirs free of federal tax). Currently you can leave $1 million to heirs federal tax free (there is also a Maryland estate tax). This number is gradually rising, from $1 million in 2002 to $3.5 million in 2009. The whole system will change in 2010 when the estate tax is scheduled to phase out completely by 2010. However, because of the way the legislation was drafted, this only lasts for one year. Unless there is new federal legislation before 2011, the tax will be reinstated and you will only be allowed to leave your heirs $1 million tax-free at that time.

While $1 million (and $3.5 million for that matter) may seem like a lot of money, you must consider the total value of your estate -- your retirement benefits alone may bring you close to that amount. Most people do not have $1 million sitting in the bank, but when added to the value of their real estate and retirement plans, it can quickly reach that amount.

 

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