Estate Planning
Estate planning is the process of deciding what will happen to your assets when you die. The main goals of estate planning are to ensure that your assets will be distributed as you desire and that taxes on your estate will be as low as possible.
Under the current tax system, a person can pass on a specified dollar amount without having to pay federal taxes. In 2000, this figure was $675,000. If your estate when you die will be very large, consider giving gifts to your beneficiaries annually. You can give up to $10,0000 each year tax free to each beneficiary.
Consider the Following During the Estate Planning Process:
- A living will makes your wishes known about what life support measures you want done in case of a medical emergency.
- A medical power of attorney allows you to give permission to someone you trust to make medical decisions on your behalf if you are unable to do so.
- A living trust allows you to transfer your assets to the trust while you are still alive. Therefore, when you die, assets do not have to go through probate, the legal process of administering the will. Your beneficiaries get your assets directly from the trust per your directions.
- A Bypass Trust ensures that upon the death of a spouse, his or her assets pass directly into a trust. This trust reduces the estate of the second spouse and consequently the tax liability when he or she dies.
