Estate Tax Planning

I attended an estate planning workshop on Wednesday and learned some interesting information. The percentage of Americans who actually have a taxable estate is less than 1%. In 2008, if you die with more than $2 million in your estate, you could potentially pay tax. In 2009, the applicable exclusion amount increases to $3.5 million. As the stock market remains volatile, I think it would be safe to say that many estates are worth less than they were at the beginning of the year. Thus, we will see even less 706s filed in 2009.

But for the average American; why estate plan? Why not just have a simple will? There are many reasons for this, but one of the main reasons is avoiding probate. P-R-O-B-A-T-E court is a place that you want to avoid like the plague. Why? Because the court gets involved and literally halts the process. If you are a beneficiary and looking for a distribution, you will have to wait for a long period of time. Also, you open up your entire estate to the public since creditors have six months to file any claims against your estate.

By creating living trusts, you can avoid this frustration and skip probate court all together. I recommend my clients to speak to an estate planning attorney and plan for the unforeseen wisely.