Estate Plans Aren’t Relevant Anymore, Right? Wrong!
By Stephanie Bezner, Attorney
In December, Congress passed significant tax legislation. The federal estate
tax exemption was increased to $10,000,000 per person, adjusted for inflation.
For 2018, the federal estate tax exemption is now $11,200,000. This means
estate taxes will impact less than 0.5% of the people in the United States!
As a result, some people are thinking estate planning is not necessary
because their net worth is so much lower.
But, estate plans are about more than tax planning. They are about making
a plan to protect yourself in the event of your incapacity and to provide
for disposition of your assets without unnecessary expense after your passing.
An estate plan with a properly funded revocable trust will allow your beneficiaries
to avoid the expense and delay of probate after you’re gone. Any
California resident with any real property OR other assets over $100,000
is potentially subject to probate. Trusts are a way for the first spouse
to protect such spouse’s residuary gifts after the death of the
surviving spouse. Trusts are also a way to provide responsibly for younger
or irresponsible beneficiaries by creating a vehicle through which assets
can be managed for such beneficiary.
If you are unable to manage your trust, you pick someone you trust to do
so. If you also designate this person to make financial decisions on your
behalf through a power of attorney, you can also avoid the need for conservatorship.
Beyond financial matters, powers of attorney give you the power to designate
who will make health care decisions for you when you are unable to make
decisions for yourself. If you don’t exercise that power, a court
will decide for you, and it may not be the choice you would make.
With the federal estate tax exemption at its highest level, avoiding estate
taxes is not a concern for very many people. However, this is not a reason
to avoid planning. It just simplifies the process because you do not have
to jump through hoops to avoid federal estate taxes. Instead, you can
focus on who should help you if you are incapable of acting on your own
behalf and who you want to receive your hard-earned assets after you’re gone.
Stephanie Bezner, Esq. is a partner with Doan-Bezner in Rancho Palos Verdes.
She is a member of Torrance Memorial’s Professional Advisory Council.
www.doan-bezner.com. (310) 541-4076.