Legally Speaking: Estate PlanningSource: RSPA
By Bob Goldberg, RSPA General Counsel
March and April always mean gathering a number of documents and reports to prepare my tax return. Like most obligations and assignments it is easy to procrastinate and avoid. Now that you have filed your taxes (or extension) there is another task subject to procrastination of which no one knows the deadline. That is Estate Planning. If you do not want the government to determine the distribution of your assets upon death, an estate plan is essential. Effective estate planning revolves around three objectives—minimizing estate tax consequences, avoiding probate, and increasing asset protection.
Currently the federal estate tax exemption is $5.12 million per person, although some states have lower rates. This is a considerable sum and many may find their estate under this amount and thus feel that estate planning is unnecessary. As they say however, wait until next year. If Congress does not revise the current tax code, the federal exemption will drop to one million dollars in 2013. We have all witnessed the difficulty Congress has in passing legislation and this issue may not be an exception. Every dollar above the one million amount will be taxed at thirty-five percent and this will increase an additional ten percent with state taxes. Proper planning can minimize and even avoid these taxes.