Is estate planning still needed?

Last year Congress passed the Tax Cuts and Jobs Act of 2017 which pretty much killed the aptly named death tax. It didn’t actually kill it just exempted those who leave less than $11 million to their heirs.

Since the idea of no leaving a federal tax burden to their heirs, many people are questioning the need for estate planning since one of the main reasons to estate plan is to lessen the tax burden. But there is more to estate planning than tax issues. has a very useful piece by Tracy Craig. Craig is a Fellow at the American College of Trust and Estate Counsel.  She has some useful info on estate planning beyond taxes.

To read more click on the links below:

State Estate and Inheritance Taxes Exist for Many

Probate Can be Costly

Many Beneficiaries Have Issues

Blended Families are Common and Can Be Complicated


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Sudden death and family finances

A recent piece on the CNBC website addresses an important issue that many people tend to not think about: the impact of a sudden death on family finances. Writer Carmen Reinicke uses the celebrity suicides of Kate Spade and Anthony Bourdain as her jumping off point to discuss what attorneys, financial advisors and therapists say what you should do if you are faced with a sudden death in the family.

To read the details see Sudden deaths like those of Kate Spade and Anthony Bourdain can devastate family finances

Here is what they recommend:

Get organized and find an expert

Address your mental as well as your financial health

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Including collectibles in you estate plan

What are collectibles?

According to the IRS, collectibles includes works of art, rugs, antiques, any metal or gem (with exceptions), any stamp or coin (with exceptions), valuable alcoholic beverages or “any other tangible personal property that the IRS determines is a “collectible” under IRC Section 408(m)”.

Quite often people don’t have any idea how much their collections are worth which is why when you are doing your estate planning it is in your and your heirs interests to find out. If you plan on bequeathing your collectibles, it is a necessity.

If you own any antiques or other collectibles you should decide how you want to distribute them after you die. You can either donate them to charity or leave them to heirs. The problem is collectibles fall into special laws separate from other assets. That is why you need to appoint someone who knows the value of your collectibles. Experts say you should contact at least two dealers or auction houses that deal in your type(s) of collectibles. They will come in handy for whoever settles your estate. They will know how much your collection is worth which can prevent any fighting among heirs, each of whom may have a different idea of their worth.

By having this information it will also prevent a clueless heir from selling any objects for less than their fair market value.  It is good to remember that even if your heirs decide to keep the assets rather than sell them, they will still need to know the value of your “objects” to establish the total value of your estate.

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Estate Planning and terminal illness

Estate/financial planning when suffering from a terminal illness is a two stage process. The first stage comes during the illness when finances need to maximized to treat the illness. If you are terminally ill and still working it can make a significant difference in terms of cash flow. Group disability benefits may be available through your job and workers compensation or Social Security disability might be possible. Maybe you have private disability insurance to supplement the other coverage.

Disability benefits may or may not be taxable. Chances are if it is a private policy they’re non-taxable. Benefits from a group-policy through an employer are not. They are considered taxable income. If you pay the premiums on your group coverage, then it will be tax exempt. If you only pay part of the premium, then it is taxable

Once you leave the workforce the second stage is in effect and a different cash flow is needed. At age 59 1/2, you can tap IRA’s, 401(k)s without occurring any penalties like the 10% early withdrawal penalty. Income tax will probably kick in, but not on a significant level.

Another source of cash can com from existing life insurance policies. Depending on the policy, you might be allowed to dip into it under certain health conditions. A typical policy will allow a lifetime payout if you have less than two years to live.

People who are terminally ill will want to be sure that their assets smoothly pass to loved ones or favored charitable causes. Thus, a thorough estate planning review can help put the your mind at ease.

In 2018, the federal estate tax exemption is $11.2 million for single taxpayers and $22.4 million for married couples. Such an exemption means relatively few people will leave an estate that is subject to federal tax; consequently, many terminally ill people below those asset levels may ignore estate planning for the federal level.

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What happens to your pets when you die?

Over 80 million people in the U.S. have at least one pet. That’s 65% of all households. Cats are more popular than dogs, but that’s still a ton of pets. There is a very good chance that they are treated as family members. Unfortunately, many people don’t include their furry loved ones in their estate planning.

A good way to plan for your pets is to create a living revocable trust. That way you can leave instructions and money so your trustee can provide for your pet. In that tust you can also assign someone to take care of your pet, but you should make sure they are willing to take on the task.

If you don’t create a living trust, you can always leave what they call a letter of instruction to your loved ones. While the letter is not legally binding it does spell out your wishes as to the care of your beloved pet.

Another option is if you move into an assisted living facility. You can find one that allows pets.

It is a good thing to remember that although your pet might be like family to you, legally they are just property. That is why it behooves you to include your pets in your estate planning just as you would your humans.

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