Estate Planning Is More Than Avoiding Taxes Today

Hi there, Bridget Mackay. I am an estate planning attorney in Petaluma, California. I practice in the area of estate planning, trust administration and probates.

Today I want to talk to you a little bit about estate planning and that is more than just avoiding taxes. There was a time when estate planning was primarily, if not, only focused on avoiding the IRS and death tax. Understandably so, because during that time, if your assets were over the allotted exemption, the tax on the amount that was over that exemption started at 46%, which is very steep. But today, most of us can die and pass on our wealth free of this tax because the exemption has grown. It is now in the year 2015, $5.4 million for each individual.

So, that makes you ask the question, “Do I still need to plan to protect my hard earned wealth when I transfer it at death or for my incapacity?” Definitely, for these three primary reasons: First, to avoid probate. Second, so you can plan for long term disability. And third, to pass on your values to future generations.

Let’s look at avoiding probate. A living trust allows you, or allows you, to transfer your assets onto the next generation privately without the need for any court supervision and involvement. It also avoids huge costs and fees. Second, planning for long term disability, a living trust will allow you to support documents that come with a living trust, like durable powers of attorney and health care directives will allow your trusted representatives that you choose in these documents to handle your affairs if you become incapacitated; and thereby avoid a possible conservatorship proceeding, which is also a court proceeding. It also gives them the tools to plan and provide for your care without draining all of your assets. And third, to pass on values to future generations. A living trust will allow you to reinforce the values you instilled in your family during your lifetime. For example, distributions to your children or grandchildren can be contingent upon graduating college or to match their income from working. There are so many other estate planning documents that may be appropriate for you. A meeting with a qualified estate planning attorney can help you put together a plan that is tailored for you and your family.

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