Do you have to be a Millionaire in order to have an Estate Plan?
There is a prevailing view that "Estate Planning is just for reserved for the Millionaires!". This is simply a fallacy and the reality is that Estate Planning is for anybody that is concerned about the disposition of their assets after they die.
More importantly, Estate Planning is especially important for people in a number of ordinary life situations such as the following;
1. Married Couples.
It is recommended that each Spouse have a separate Will as Joint Wills can sometimes result in some legal problems in certain States, especially if both the couples die together at the same time or within a short time of each other.
2. Divorced Couples.
For Divorced couples it especially important to establish a Trust to ensure that the children of the divorced couples are protected in the event of the death of their divorced parents. This is especially true if there is concern that assets that were acquired during the marriage of the divorced parents pass to the children of the former spouse!
3. Business Owners.
Business Owners should create an Estate Plan that addresses the succession plan that clearly indicates what would happen to the business when one of the partners or owner dies. It is important the business has sufficient cash flow on hand to either buyout the shares of the deceased partner and continue to function normally as well.
The current Estate Tax law provides a Tax Exemption for Estates that are valued at $2m. But, this exemption is scheduled to revert back to $1m by the year 2011. Hence, unless Congress acts to maintain the current exemptions, it would seem many more Americans would be subject to an Estate Tax!
Thus, it is strongly recommended that one should consider an establishment of a Trusts to protect your Assets from the Estate Tax, especially once a Taxpayer has accumulated assets in excess of $1m.
What is the Current Estate Tax Rate?
The Highest Federal Estate Tax Rate is currently set at 45% until the year 2009. Currently, in 2010 the Estate Tax has been repealed, and after that the tax exemption is reverted back to $1m and the tax rate has been increased to 50%.
What are some of Assets that are included in the Estate?
Some of the assets that are included as part of the Estate are as follows;
1. Stocks, Shares and Bonds.
2. Cash in Bank, Savings Account and Money Market Accounts.
3. Both Personal and Rental Real Estate Property.
4. Retirement Plans.
6. Personal Property, such Cars, Jewelry, Rare Coin Collections and Art Collections etc