Vincent John Bazemore, Jr. Estate Planning Expert

Author: Andrew Stratton
When people think of Estate Planning, they generally think of legal wills. Estate planning is not just a will, although it does involve writing one. Rather, it’s a series of legal steps that involves allowing your beneficiaries to avoid probate and minimize the taxes incurred, and for you to write a living will in which you nominate trusted associates who would assume power of attorney and executor status should you be incapacitated or die. Estate planning also allows you more direct control over how your assets will be treated when you’re gone.

One of the most important parts of any estate plan are measures to avoid too much of the estate’s worth being lost to taxes. In the United State and abroad, dying can attract a number of specific taxes from both State and Federal governments, like death tax and estate tax. The simplest way to minimize estate tax is to name recipients of funds or assets from your estate in your legal will, specifying that a certain amount should be given as a gift. Provided your lifetime tax-free gift threshold of $1 million is not exceeded, these portions cannot attract any taxation.

An important part of any estate plan is the inclusion of a living will. A living will is not usually considered a legally binding document, however, it is given consideration if you are ever incapacitated and left unable to carry out your legal rights, or make decisions. While the living will itself may not carry much weight, you can nominate someone to assume your enduring power of attorney (EPA). If you are unable to exercise the living will as a legally binding decision, your enduring power of attorney can only be challenged by a court.

The will itself is the most important part of any estate plan. If you should die without writing a will, the specific laws of your state will determine how your assets will be divided following probate. Additionally, with no prior planning of where the assets should go on the event of your death, your estate is likely to be taxed the maximum possible amount. Where no will is present, the spouse is likely to keep one third of the value of the estate with the remainder to be distributed evenly among children.

An estate plan enables you to stipulate, for instance, that if your children receive an inheritance, the property is given to them personally and not, for example, to the child’s spouse. Should your child ever divorce, then the value of any inheritance received would not have to be shared in any divorce settlement, as it would not be a shared asset of that marriage.

One of the more important aspects of estate planning is the protection it can provide your assets. Typically, after a person passes away their family sells the assets that were left to them and divides the proceeds among themselves. If, however, you have a company or significant property holdings, you may wish to prevent the breakup of any of these assets, judging them to have more value whole compared with their value after being broken up.

Estate planning allows very specific instructions for how such assets should be treated if you wish to prevent this asset division from happening. For example, you can specify in your will that you require that your business be run by a family trust whose members and membership requirements you specify. It is not uncommon for people to wish to leave behind some legacy when they’ve gone, and the establishment of a family trust to ensure your assets are managed properly by a family member is a good way of ensuring it.

Another common request made is for a trust fund to be established as a scholarship fund or similar. Again, with a proper estate plan, it is possible for a benefactor to specify who a scholarship fund is for, and who is allowed to sit on any board or committee it relies on to pick a recipient.

Estate planning is the method by which specific instructions may be given in advance on how to manage your affairs should you become incapacitated or die. Estate planning represents the best way of protecting your assets from the whims of financially irresponsible relatives, excessive government taxation, and dissolution of your assets by the normal laws of succession in the state or country concerned.

Author: Robert Valentine

If you’re like most Americans, you like to give gifts nearly as much as you like to receive them. Luckily, if you’re serious about estate planning there’s a handy technique called gifting that can potentially save your family, friends and heirs a lot of money on estate taxes in the future.

With gifting, you not only benefit yourself, you potentially save future generations from a heavy tax burden. In addition to a reduction in taxes, by reducing the size of your estate, you generally reduce the amount of probate costs and legal fees which can often eat away much of your estate. So what exactly is gifting?

Gifting is exactly what it sounds like: a gift. It’s a gift that can be given to a spouse, a family member or a friend. It’s a technique that has been used frequently by people to reduce the value of their estate and can be done several ways.

Each person in the U.S. can give assets or property of up to $12,000 a year. That amount applies to each individual they gift to. This gift can be given to basically anyone without paying any gift taxes, as long as the amount gifted stays under the limit. You can give gifts, tax-free, to as many people as you wish. You can also gift an unlimited amount of property to charity and your spouse.

By law, you can gift a spouse unlimited amounts of property each year without paying any taxes. This isn’t always suggested however, since it just shifts the larger estate burden onto your spouse. One helpful technique is to team up with your spouse and gift to specific individuals, such as children and grandchildren. When you and a spouse get together and gift, which the IRS has termed “gift splitting,” you can give up to $24,000 to each individual without paying any gift tax. This allows you to quickly reduce your estate by a large amount.

Gifting is also a great way to give assets to your family that will end up appreciating in value. That way, you not only reduce the amount that may be taxed in your estate, but you reduce the amount that your asset would have grown to by the time you passed away.

There are a great many details involving taxes and gifting that remain to be seen. The tax laws and regulations can get extremely complicated, which is why estate planning is best left up to professionals. But the main idea remains, gifting can probably save your estate and your heirs’ money in the long run.

While estate planning is often put off because of the uncomfortable topic of death, it may be one of the most important financial planning tools available. It may also be one of the most important ways to save your family from heartache. One mention of Terri Schiavo is all it takes to conjure up memories of legal battles, congressional intervention, and a media circus that most certainly missed the most important aspect of the struggle: Terri.

Gifting is simply one of the many convenient ways to leave a legacy that remembers your life for its accomplishments instead of courtroom battles. Whenever contemplating gifting, or establishing an estate plan, it’s best to meet with a financial professional and a qualified estate planning attorney. A little bit of careful planning can go a long way. In the end, gifting allows you to take advantage of tax savings and choose the way you want to be remembered, which is truly a gift that will keep on giving.