A-Z of Estate Planning

V – “V” stands for Valuation of the estate.  The VALUATION of your estate will determine whether or not it will be subject to tax.  Of course, there are vehicles, such as gifts to charity, whether at death or before that can help reduce exposure to tax, it is the final value that will determine how much tax, if any, that will be due. It can be the case that an estate VALUE is unfairly high due simply to the fact that a person died on a day that, for example, the stock owned by the decedent was unusually high on that date.  Fortunately, the Internal Revenue Code allows a trustee to choose a VALUATION date six months after the date of death, thus, perhaps, increasing the chance of a more favorable (less tax heavy) VALUATION for the estate. 

W – “W” stands for WILL.  Sometimes formally called “LAST WILL & TESTAMENT”, your WILL (very much like a living TRUST) is a written set of instructions for how you want your assets distributed at your death.   Once again, one of the main differences between a WILL and a TRUST is that the administration of a WILL is generally required to go through the public PROBATE process, while a TRUST administration is typically handled privately.  

X – “X” stands for GENERATION X.  Typically considered be those born after the Baby Boomers, this generation, which began in 1961 and ended around 1981 are reaching middle age now, and if they have not already, should very seriously consider putting their estate in order. It is really never too early to begin estate planning, even if it is obtaining a low priced life insurance policy and having a simple WILL when you are in college, or soon thereafter.

 Y – “Y” stands for YOU and YOUR.  A well thought out estate plan, which has been put in place will put YOU at ease knowing YOUR family and beneficiaries are provided for and will not have to pay for or struggle with an incomplete estate.

Z – “Z” stands for ZERO.  The goal of many individuals is to have their estate pay ZERO taxes at their death.  Until the recent Trump tax cuts, this was far more difficult even for modest estates.  Now, and until the year 2025, a single person can leave his heirs over $11 million dollars and pay ZERO tax on the transfer.  Individuals leaving in excess of $11 million dollars, can most definitely still benefit from estate planning, greatly reducing the tax owed at their death.