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(Part of a series of articles on charitable giving and the Union County Foundation by David Vollrath - Exec. Dir.) Estate planning isn’t glamorous, it isn’t fun and it isn’t a first choice of how to spend spare time. But estate planning does merit attention because ultimately the accumulation, conserving and distribution of an estate depends on it. The following are some important considerations recently highlighted in Outlook magazine that can help simplify and make estate planning more effective. These are basic concepts but their implications are important. Title Assets Properly. In general assets titled in a person’s name are taxable as part of the estate. Certain assets a person may or may not want to personally own, for example life insurance policies. If someone owns their own life insurance policy the death benefit is part of your estate value and may be subject to estate taxes depending on the size of your estate. Consider having the ultimate beneficiary own the policy. thus excluding the death benefit from the estate value. Use the estate tax exemption to its full advantage. Understand that the marital deduction allows someone to pass on an unlimited amount to their spouse - estate tax and gift tax-free. In 2003 the first $1,000,000 of estate value is tax-free (This amount gradually increases to $3,500,000 in 2009). This means that someone can take advantage of the marital deduction plus pass up to $1,000,000 to another heir tax-free. Select the right executor. The person selected should have time, ability and commitment to successfully complete the important task of carrying out someone’s stated wishes. Consider whether the executor has a conflict of interest preventing him or her from fairly performing their duties. Ideally an executor should know they have been selected. In addition, consider naming a back-up executor for contingency purposes. Specify the beneficiaries. Some people name their estate as their beneficiary for life insurance and pensions. This is rarely a good idea. This can result in pay-outs being subject to probate and often delays heirs from receiving their money. Instead, name both primary and secondary beneficiaries. Leave clear current instructions and documentation. This sounds like common sense but it is often neglected. Provide not only important documents but also names and contact information of trusted advisors such as attorneys, accountants, insurance agents and financial planners. Let those who need to know where all this information is located. If it’s buried in the back of a drawer those who need the information are not likely to find it. Give while you live. One of the easiest and most effective ways to distribute assets is to take advantage of the annual federal gift tax exclusion. This federal exclusion allows someone to annually give up to $11,000 to as many beneficiaries as they desire. This means a husband and wife could give up to $22,000 to an individual without any gift tax consequences. This gifting method allows a reduction in taxable estate over time, while directly helping an heir, friend, or loved one during the giver’s life time. For more detail on these concepts contact one of the many local estate-planning professionals. The Union County Foundation is equipped to assist in fulfilling charitable goals as they may apply to estate planning. Call 937-642-9618, email us at commfounduc@imetweb.net, or stop by the Marysville office at 126 N. Main St. We are here to help... “preserve your footprint in time. ” |
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