SENIOR CITIZENS REVIEW THEIR ESTATE PLANS

Nov 19th, 2011 | By Sharon Shaw Elrod MSW EdD | Category: Senior Finances

Estate Tax Rates Set to Change in 2013

Estate tax rates are set to change – yet again – in 2013.  Congress, of course, can enact legislation prior to the rate change date, but if they don’t, the rate defaults to $1M annual gift tax exemption, with a 55% tax rate.  For the balance of 2011 and 2012, the rate remains at $5M annual gift tax exemption with a tax rate of 35%.

Whether you anticipate the change in 2013 or not, annual review of your estate plan to develop the best tax strategy is advised by most financial planners.  Most of them agree the review needs to include the following:

What Does Your Financial Plan Need to Include?

  • Be sure your will and trust documents are current per your state’s requirements.  Trusts help you protect some of your property from tax at the time of your death, and also helps avoid probate court.
  • There are two kinds of Power of Attorney you need to have.  One is health care power of attorney and the other is financial power of attorney.  These are two separate documents.  If you become unable to make your health care decisions, you need to have someone you trust making those decisions on your behalf.  As well, if you are unable to make decisions about your financial affairs, you need someone you trust in place to make those decisions for you.  Many states also have legislation that allows you to tell medical personnel what to do in the event you are on life support or are requiring extraordinary measures to keep you alive.  That document is a living will, and Do Not Resuscitate (DNR) orders generally accompany the living will, directing paramedics and medical personnel what to do in the event you stop breathing or show signs of imminent death.
  • You need to review your list of what family heirlooms, jewelry and other sentimental items go to whom in your list of progeny and loved ones.  You may even want to give gifts before you die, to be able to enjoy seeing your children and grandchildren receive those precious pieces.
  • Finally, be sure you have a qualified financial planner/estate planner employed to help you manage your unique situation.  The plan you have needs to work for you, not Joe Blow across the street.  If you don’t have someone assisting you, seek the advice of your clergyman/woman or attorney or trusted family member or friend.  This is not the time to be penny-wise and pound-foolish.  Spend a few bucks now to be sure your estate, no matter how big or small, is protected for your descendants.



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