CNN's "Money 101" series recently covered estate planning and offered up some information and tips for those considering to implement the various tools of estate planning. Here are some
- Having even a basic estate plan in place is important, no matter what your net worth may be. Contrary to popular belief, you don't need to be wealthy to consider having a trust and/or will.
- The elements of the estate plan include the following: a will, the assignment of power of attorney, and a living will or healthcare proxy, and (for some people) a trust may be the best solution
- Start by taking an inventory of assets, including investments, retirement savings, insurance policies, and real estate or business interests. Consider who you would want inheriting your assets, who should handle financial affairs if you're incapacitated and, lastly, who you would want making medical decisions if you are not able to make them yourself.
- Everybody should have a will, since it can become extremely costly for your heirs and you have no control over who gets your assets. This is also needed to take care of any holdings that may exist outside the trust.
- Make sure to discuss estate planning with family members, in order to avoid confrontation or conflict surrounding the distribution of assets.
- There are a few federal tax issues to consider: The federal estate tax exemption has been rising gradually and is expected to hit $3.5 million this year. In addition, the estate tax is coming down and is scheduled to phase out in 2010. Yet, this may only last a year, depending on whether Congress chooses to re-instate it in 2011. You should also be well-versed in any state taxes that may be levied against your estate.
- Two ways exist to give gifts tax-free and reduce your estate. First, you may give up to $12,000 per year to an individual without being taxed. Second, payments to medical or education bills are tax-free regardless of the amount, so long as the payments are made directly to the institution where the expenses were incurred.
Source: CNN
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