Mar 04, 2013
By Rick Law Elder Care Attorney in Chicago.
If one’s estate goes through the probate process, it can essentially take anywhere from nine months to two years to complete. In addition, probate fees are set by state statute and can consume up to 6 percent of the individual’s entire estate. And, if the estate goes through probate, the entire proceeding will also become public knowledge.
Having a will is certainly a good start in helping to keep assets safe. However, there are both pros and cons – especially if a will is the only type of planning done by the decedent. With a will, re-titling of assets won’t be necessary, and the decedent’s creditors will only have a limited amount of time to make any claims against the estate. In addition, if there are any minor or special needs children involved, a will can provide for the appointment of a guardian.
But using a will as the only estate planning tool has some definite disadvantages, such as the fact that since wills are only effective at the time of an individual’s death, they offer no opportunity to plan for incapacity.
In addition, a will can quickly become outdated, so unless the individual regularly updates it, there could be some real issues upon death. Also, having just a will in place without any other planning documents will still require the estate to go through the probate process.
It is an unending goal of most people to minimize taxes as much as they possibly can, and to preserve wealth for themselves and their loved ones. Certainly, that goal comes into view even more clearly when it comes to estate planning.
There are some good reasons for this. Federal estate taxes can get even higher than personal income taxes, with rates as high as 35 percent. When this is combined with inheritance taxes levied by many states, estate tax rates could get to 46 percent or even higher.
Uncle Sam created uniform tax rates for both gift and estate transfers of assets. But, since the year 2002, Congress has set different tax credits for gifts and estate taxes. For example, the estate tax credit allows every American to pass a specific amount of assets tax-free to their heirs. And, unlike the $1 million gift tax credit that must be used during an individual’s lifetime, the estate tax credit is allowed to be used after death when distributing the assets in their estate.
Ever since 1997, with the passage of the Taxpayer Relief Act, the estate tax credit gradually increased over the next several years. However, for the year 2010, there was a full repeal of the estate and gift tax. And with this, people were unsure as to what would happen after 2010.
With the signing of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 by President Obama, federal estate taxes were restored – but not to their original 2002 levels. Instead, for the tax years of 2011 and 2012, there is a special $5 million estate tax exemption.
The hard numbers for this are available in my book “Cruising Through Retirement”. You can purchase the eBook here.
Estate taxes are due to the IRS within nine months from the decedent’s date of death. Because of this, oftentimes loved ones are forced to sell assets and other belongings in order to pay this tax bill. Unfortunately, in many cases the assets that are sold are let go for far below market value.
There are planning strategies that will not only save and protect assets, but can also allow much more control over where those assets go and how they are utilized. While estate taxes can never completely be eliminated, they can effectively be reduced with
the use of different types of trusts.
Too many families needlessly lose everything they have. Don’t let that be you. If you need help paying the overwhelming cost of long term care, give our office a call at 800-310-3100. Your first consultation is absolutely free. We’ll let you know what steps you need to take, right now, to protect yourself and your family. Call now, because when you’re out of money, you’re out of options!
Rick L. Law, Attorney, Estate Planner for Retirees.
Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future. Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care. Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet. Call 800-310-3100 for your free consultation now!
My wife and I had our first child three years ago. That’s when we decided to set up a trust, should anything happen to either of us. We reached out to Zach Hesselbaum to help us out. He was very thorough and professional throughout the whole process. Zach went above and beyond to make sure that we understood every detail of setting it up and he did an excellent job. We recently had our second child a few months ago. With the new baby, he helped us make the necessary revisions to the trust. Zach made this process great for us! I would definitely recommend using him for any of your estate planning needs!
Tom G., Naperville, IL