Planning Opportunities Available to Affluent Families

With the $5.12 million per person federal tax exemption ($10.24 million for married couples), most of the estate planning “talk” these days has been on the planning opportunities available to wealthy families. However, the need for estate planning affects everyone!

According to a recent Forbes article, 55% of Americans do not have a will. The article goes on to suggest the following “common sense” guidelines for determining the importance of having a personalized estate plan:

(1) Minor children – Everyone with minor children needs to nominate guardians for their children. The author suggests the parents select “the first one that comes to mind” and that it is likely best to “don’t over think it.”

(2) Beneficiary Designations – For those with less wealth, beneficiary designations may control how most of their property passes. But for everyone, are these designations current, and do they pass all of the property as the client desires?

(3) Home Ownership – The article recommends a trust for homes (but state law and lending issues may necessitate keeping your home out of a living trust) and investment property to avoid probate.

(4) Affluence – Popular belief is that the current exemption means that only affluent families need concern themselves with the federal estate tax, but as the author notes, the exemption is scheduled to decrease to $1 million per person starting in 2013. What will the exemption amount be in the year of death (when it really matters)?

(5) Special Circumstances – Those with special circumstances (such as a special needs child, a spendthrift grandchild, charitable interests, etc.) definitely need an estate plan.

(6) And for everyone . . . Powers of Attorney – the author recognizes that everyone needs, at a minimum, financial and health care powers of attorney

Remember that estate planning is not permanent, and if circumstances change plans can be updated. But it’s better to have something in place when needed than nothing at all.

The full Forbes article is available online.