Estate Tax Planning
You and your spouse are very responsible, organized, hardworking individuals. You feel secure in the knowledge that due to your hard work over the years, you own your own home, [it may not be Windsor Castle but it’s yours], you have saved or are in the process of saving enough money to sustain your comfortable lifestyle after your retirement and, unlike your neighbor, you did the right thing and actually went to the trouble and expense of executing a Will so your affairs will all be in order for the benefit of your loved ones you leave behind. Now you can sit back, reassured by the knowledge that you have done all that you can do to provide the most for your loved ones after you are gone, right?...well there are one or two more things to be added to that “to do” list which could benefit those loved ones you are leaving behind even more…for instance, although you have gone to the trouble and expense of executing a Will, have you done any tax planning to minimize and/or eliminate the possibility of estate tax liability?
For instance, if the combined assets of you and your spouse are equal to or exceed the Federal Estate Tax exemption amount and you do not do any tax planning during your lifetime, the first of you to die loses forever the right to pass on to your loved ones the full amount of the exemption, estate tax free. Why does this matter you ask if our combined assets are equal to or less than the Federal exemption amount? The answer is because even if you would not owe any Federal estate tax, by not doing any tax planning before you die, you may well discover that you have unnecessarily incurred a Massachusetts estate tax liability, which can translate to potentially as much as a 50% tax rate on the amount over the state exemption. And what you should also be aware of is, unlike probate, assets such as life insurance policies and retirement accounts are countable assets for the purpose of determining estate tax liability.
Estate planning is a uniquely personal process; the decisions made and the documents executed are a direct reflection of the priorities and principles of each individual; it is your last opportunity to leave a footprint in the sand. Years of hard work and carefully made decisions were the building blocks of where you are today; careful consideration during your lifetime should also be given to the decisions which will determine what happens after you have gone to all you have achieved.
This article is for informational purposes only and does not constitute legal advice. An attorney client privilege can only be established upon meeting personally. After a discussion of the specific facts during the meeting and the payment and acceptance of a retainer, the attorney client privilege begins.
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