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 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
Basic Steps Toward Estate Planning
(Part of a series of articles on charitable giving and the Union County Foundation
by David Vollrath - Exec. Dir.)
Estate planning isn’t glamorous, it isn’t fun and it isn’t a first choice of how to spend
spare time. But estate planning does merit attention because ultimately the accumulation, conserving and distribution
of an estate depends on it.
The following are some important considerations recently highlighted in Outlook
magazine that can help simplify and make estate planning more effective. These are basic concepts but their implications
are important.
Title Assets Properly. In general assets titled in a person’s name are taxable
as part of the estate. Certain assets a person may or may not want to personally own, for example life insurance
policies. If someone owns their own life insurance policy the death benefit is part of your estate value and may
be subject to estate taxes depending on the size of your estate. Consider having the ultimate beneficiary own the
policy. thus excluding the death benefit from the estate value.
Use the estate tax exemption to its full advantage. Understand that the marital
deduction allows someone to pass on an unlimited amount to their spouse - estate tax and gift tax-free. In 2003
the first $1,000,000 of estate value is tax-free (This amount gradually increases to $3,500,000 in 2009). This
means that someone can take advantage of the marital deduction plus pass up to $1,000,000 to another heir tax-free.
Select the right executor. The person selected should have time, ability and commitment
to successfully complete the important task of carrying out someone’s stated wishes. Consider whether the executor
has a conflict of interest preventing him or her from fairly performing their duties. Ideally an executor should
know they have been selected. In addition, consider naming a back-up executor for contingency purposes.
Specify the beneficiaries. Some people name their estate as their beneficiary for
life insurance and pensions. This is rarely a good idea. This can result in pay-outs being subject to probate and
often delays heirs from receiving their money. Instead, name both primary and secondary beneficiaries.
Leave clear current instructions and documentation. This sounds like common sense
but it is often neglected. Provide not only important documents but also names and contact information of trusted
advisors such as attorneys, accountants, insurance agents and financial planners. Let those who need to know where
all this information is located. If it’s buried in the back of a drawer those who need the information are not
likely to find it.
Give while you live. One of the easiest and most effective ways to distribute assets
is to take advantage of the annual federal gift tax exclusion. This federal exclusion allows someone to annually
give up to $11,000 to as many beneficiaries as they desire. This means a husband and wife could give up to $22,000
to an individual without any gift tax consequences. This gifting method allows a reduction in taxable estate over
time, while directly helping an heir, friend, or loved one during the giver’s life time.
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