Even if you don’t expect your estate’s value (including death benefits from insurance policies) to total more than the current IRS limits, you may need an estate plan. Proper estate planning can use lifetime gifts and trusts to minimize your estate tax liability. MASINMISKO can develop suggestions and recommendations for you to review with your accountant and attorney.
If you do nothing to control the disposition of your estate, by default you have an estate plan–one designed and administered by the government, with no regard for the needs and desires of you and your family.
Definition of Estate Planning
Estate planning involves using wills, trusts, beneficiary designations, powers of appointment, property ownership (joint tenancy with rights of survivorship, tenancy in common, tenancy by the entirety), gift, and powers of attorney, specifically the durable financial power of attorney and the durable medical power of attorney. Many estate planning attorneys now advise clients to also create a living will. Specific final arrangements, such as whether to be buried or cremated, are also often part of the documents. More sophisticated estate plans may even cover deferring or decreasing estate taxes or winding up a business.
Estate Tax Code
Because the United States tax code does not tax life insurance proceeds as income, a life insurance trust could be used to pay estate taxes. However, if the decedent holds any incidents of ownership like the ability to remove or change beneficiary, the proceeds will remain in his estate. For this reason, the trust vehicle is used to own the life insurance policy and it must be irrevocable to avoid inclusion in the estate.
Mediation serves as an alternative to a full-scale litigation to settle disputes. At a mediation, family members and beneficiaries discuss plans on transfer of assets. Because of the potential conflicts associated with blended families, step siblings, and multiple marriages, creating an estate plan through mediation allows people to confront the issues head-on and design a plan that will minimize the chance of future family conflict and meet their financial goals.
MasinMisko and LPL Financial are not engaged in rendering legal or tax advice. Individuals should consult with their own legal or tax advisor concerning their own specific situation.