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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends and you favorite charities. For more information be sure to visit our web site where you will have access to our blog, events schedule and a complimentary newsletter subscription!

No Federal Estate Tax, No Problem?

It’s official. Since the passage of the 2017 new tax law, the federal estate tax exemption is $11.4 million per individual and $22.8 for a couple. As a result, the federal estate tax is no longer the biggest estate planning concern for most Americans. So … no federal estate tax, no problem, right? Wrong.

The non-tax issues of estate planning are even more compelling because they cut to the very heart of our lives, work and families. Regardless of whether you may or may not incur a federal estate tax liability, issues of personal dignity, family conflict and your life’s legacy are fundamental to proper estate planning.

Your Personal Dignity

Car crashes, heart attacks, Alzheimer’s and strokes. Unexpected injuries and illnesses can strike anyone, at any time, leaving them legally incapacitated. Once you are legally incapacitated, you can no longer manage your own personal, health care or financial affairs. Important decisions affecting you must be made, despite your lack of legal capacity, often on a day-to-day basis. Bills need to be paid, and so do taxes. While you cannot emotionally prepare for something like incapacity, you can legally prepare to ensure that your wishes are honored should the worst happen.

If you became incapacitated, who would make decisions on your behalf? If you’re married, you’d probably guess your spouse. If you’re at least 18 years of age and living at home, you’d probably say your parents. Both answers are incorrect.

On your 18th birthday, you are considered an adult and are legally responsible for your own decisions. Whether married or single, you must appoint agents through a Durable Powers of Attorney to make personal, health care and financial decisions on your behalf in the event of incapacity. Alternatively, a court process involving at least three lawyers may be required to appoint agents to make such decisions for you under the ongoing supervision of the court.

Avoiding Family Conflict

Avoiding family conflict is one of the most compelling reasons for estate planning. Sadly, conflicts are rather common these days following the death of a family member. That fact was confirmed in a survey conducted by the AARP/Scudder Investment Program. In the survey of Americans age 50 and over, 20 percent of respondents cited problems among surviving family members due to their inheritance, or lack thereof. The survey made an interesting discovery:  Cash is the most prized asset over which family members fight, but tangible personal property (e.g., antiques and heirloom jewelry) came in a close second. In fact, respondents reported that such property accounts for 47 percent of the feuds, followed by personal residences at 43 percent, other real estate at 31 percent and other investments at 11 percent. Fortunately, the laws of most states provide a flexible solution for the specific distribution of tangible personal property.

Your estate planning attorney will know whether your state authorizes a separate writing to be made on which you may list the specific items and who is to receive them. In most instances, this writing may be handwritten, but it must be signed and incorporated by reference within the estate planning legal documents themselves. A little time spent preparing this writing now as part of your overall planning can help thwart problems later.

Perhaps the most important step you can take to minimize family conflict is to communicate your plans ahead of time. Then be sure to commit those plans to legal documents and make updates or changes as necessary to reflect changes in your family dynamics, financial circumstances, and estate planning goals.

Protecting Your Legacy

Leaving an inheritance to provide for your heirs seems like a positive decision. However, the outcome may be far from what you intended if you haven’t considered the potential risks. What if that inheritance were squandered by a shortsighted eighteen-year-old on an expensive sports car, leaving the heir broke but fashionable? What about money left to a previously happy couple now engaged in a bitter divorce? What would happen if the heir were involved in a lawsuit or bankruptcy?

If you die without even a basic will, or with one that is outdated and no longer meets your needs, you could leave your loved ones tied up in legal knots at a most vulnerable time in their lives. Proper planning can ensure your family is provided with a thoughtfully prepared, efficiently implemented and effectively administered estate plan that protects your legacy at death and for generations to come.

About Those Taxes …

While you may not have to worry about federal estate taxes, there may still be state estate taxes and inheritance taxes to plan for. Twelve states and the District of Columbia will collect a state estate tax. Six states have inheritance taxes.  And some states impose a nonresident estate tax on real and tangible personal property situated within the state. So even if you reside in a state without a death tax, like Missouri, but own property in another state, death taxes could still be an issue.

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