Estate Planning 2012 – Do I Need to Worry? Is there a Strategy Going Forward? by George Mentz, Esq.

You may think estate planning is just for the wealthy. If your assets are worth $1,000,000 or more, estate planning is still a pending and delicate issue. With most assets such as homes and stocks devalued at the moment, those prices and valuations may move up quickly in the coming months and years. You may not also be familiar with your spouse’s net worth or pending inheritances either.

With the tax changes for 2011 and 2012, you may not need to worry so much about estate taxation because of the 5 million that an individual can leave without estate taxes while the spousal exemption is still in force, but it will keep changing and taxes will probably go back up soon. Presently, the old trusts may or may not be needed depending on your net worth, spouse, health, children and other dynamics, so this is one of the most dynamic times in history for a review of estate planning documents.

Tax Year Tax Rate Exemption Equivalent
2009 45% $3,500,000
2010 N/A or 35% N/A or $5,000,000
2011 35% $5,000,000
2012 35% $5,120,000
2013 55% $1,000,000

The worst problem is that there is no guarantee that any large exemption will be available anytime in the near future.

Adding up the value of your assets can be an eye-opening experience. By the time you account for your home, investments, company value, retirement savings and life insurance policies you own, you may find your estate will end up in the taxable category.

The strategy that must be evaluated by yourself or your parent(s) is whether to use the large exemption NOW and make large gifts of your holdings to your loved ones in the short term.

By giving now, you can fund:
1. Pre-Fund Education of children and grandchildren
2. Home purchases or rental real estate in a low market for children.
3. Give away assets such as stock to loved ones.
4. Move large gifts of family stock to your children.

Further, it is always a good time for you or your clients to review:

1. Durable Power of Attorney
2. Wills
3. Medical Directives
4. Any Trusts (Some may want to be voided and replaced)
5. LLCs and Company Stock (operating agreements)
6. State Tax issues
7. Guardianship designations
8. Whether a professional trustee should be involved
9. Checking all of your designations and beneficiaries of your insurance, annuities, or other non-probated assets.
10. Document preservation.

The last challenge is document preservation. Make sure your important documents are: with a reputable or safe law firm, with a reputable trust department, in a bank deposit box that somebody knows about, or preserved in another type of lock box service that will notify your loved ones about your intentions.

All Rights Reserved – No legal advice is intended herein. Please consult with a qualified or licensed professional in your jurisdiction before making any important decision.