Common Estate Planning Questions and Answers
WHAT IS ESTATE PLANNING? Estate Planning is preparing for the orderly transfer of everything you have, to everyone you care about. In short, it is legally arranging to give what you have, to those you want to receive it, when and how you want them to receive it, with a minimum of taxes, court costs, legal fees and hassle for your family.
WHO SHOULD PLAN? Everyone, single or married, who has accumulated any assets and wishes to determine how those assets will be managed in the event of incapacity, or distributed at the time of death. No estate is too small for planning. It is especially important if you have minor or special needs children or grandchildren; if you wish to control how your assets will be managed or transferred; or if you want to save estate taxes and probate costs.
WHAT IF MY ESTATE IS NOT VERY LARGE? You should still plan. Otherwise, your estate is guaranteed to go through the probate court and the State will determine who will receive your assets.
HOW DO I KNOW IF I NEED ESTATE TAX PLANNING? The federal tax laws allow each of us a tax credit to protect a portion of our estate against the inheritance tax. In 2009, any individual can protect the first $3.5 million ($2.0 million for state of Washington purposes) of their estate, and, if properly planned, a couple can easily protect up to $7 million ($4.0 million in Washington), and thereby saving up to a million and a half dollars in federal estate taxes (and an additional $300,000 or so in Washington). For larger estates there are additional legal techniques for management and transfer of assets to heirs in ways that minimize the taxes.
NOTE: The Federal Credit Equivalent amount is scheduled to be repealed next year, but return to $1,000,000, per person, by the year 2011.
HOW MUCH WILL PLANNING MY ESTATE COST? Planning discussions, and preparation of basic Estate Planning trust documents often take several weeks to complete. Fees for this work generally range between $500 and $5,000 depending on the complexity of your wishes, and may be several thousand dollars more depending on the scope of work. Estate Planning documents have significant legal and tax consequences. You should consult a qualified, experienced estate planning attorney who can customize your plan to meet your personal goals and objectives.
WHEN SHOULD I PLAN? Now! Estate planning is done in order to prepare for the event of an injury or illness resulting in incapacity or death. None of us likes to think about our own mortality, or even the possibility of becoming incapacitated. That is why so many families are caught off guard and unprepared when incapacity or death strikes. You can only plan your estate before these events occur. After, it is too late. Estate planning is one of the most thoughtful and considerate gifts you can give to your family.