You may not spend a lot of time thinking about estate planning. In the back of your mind, you may feel as though you should create a last will someday, but you may not take it any further than that.
This is a risky way to approach the subject of estate planning. In fact, there are some things that you may not have thought about, and we will take a look at some of them in this blog post.
Estate Tax
There is a federal estate tax that carries a 40 percent maximum rate, and no, that is not a typo. This is a hefty rate that can significantly impact your family’s financial future if you are exposed to the tax.
There is a $5.43 million credit or exclusion during the current calendar year. Unlimited tax-free asset transfers between spouses are allowed, but transfers to others that exceed the amount of this exclusion are potentially taxable.
If you are exposed to the estate tax, there are things that you can do to preserve your wealth.
Spendthrift Protections
A last will would not provide any spendthrift protections. The heirs that are named in the will would receive lump-sum inheritances, and no controls would be in place.
If you have concerns about spendthrift heirs, you could implement strategies that would protect their inheritances.
Probate Avoidance
The probate process would enter the picture if you state your final wishes in a last will. The will would be admitted to probate, and the heirs would not receive their inheritances until the estate was probated by the court. This will typically take close to a year in most areas of the country.
It is possible to be proactive about the implementation of probate avoidance strategies to make sure that your heirs receive their inheritances in a timely manner.
Special Needs Planning
People with disabilities often rely on need-based government benefit programs like Medicaid and Supplemental Security Income. A windfall of money could result in a loss of eligibility.
However, if you act in an informed manner, you can provide resources that can be used to improve the loved one’s quality of life without impacting benefit eligibility.
Pet Planning
Many seniors would benefit from pet ownership, but they are afraid to act, because they have longevity concerns. If you create a pet trust, you could go forward with peace of mind. You fund the trust and name a trustee, and the trustee would make sure that your pet is cared for in accordance with your wishes if you do predecease the animal.
Schedule a Free Consultation
We have provided a few things to think about in this piece. If you would like to take things a step further, send us a message through our contact page to request a free consultation: Indianapolis IN Estate Planning Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
- Where Should I Keep My Estate Planning Documents? - September 16, 2020
- What Can I Do to Reduce Estate Taxes? - September 9, 2020
- How Can I Plan for Incapacity? - September 4, 2020
