Since the federal estate tax exclusion left many estates free of the danger of heavy taxation, some people have had the misconception that estate planning is no longer important. The contrary is true, as without a strong estate plan, your assets could be tied up in probate and not provide for your heirs adequately upon your death. It is important to work with Kingwood estate planning attorneys when planning your estate.
Ten Estate Planning Techniques
The following are some of the more valuable techniques you should consider in your estate plan. Not all of these may apply in your specific case, but generally you should include at least a few tools as you plan how your assets will be left to your spouse, children, loved ones, charities, etc.
- Revocable Living Trusts: These both avoid probate and allow for use by you during your lifetime should you need the assets in the trust. For instance, you might need to spend an extended period of time in a nursing home.
- Healthcare Power of Attorney: Should you become incapacitated, it is important that someone is able to make decisions about your health on your behalf and in accordance with your wishes.
- Property Power of Attorney: This individual manages your affairs and property if you are unable to do so.
- Irrevocable Life Insurance Trusts: One of the areas that can still be vulnerable to estate taxes is a large life insurance policy. An irrevocable trust separates the policy from the rest of your estate.
- Family Limited Partnerships: This tool can protect business property from creditors, allow you to gift children and parents who are retaining management of the business, and reduce value of any property for transfer taxes.
- Charitable Remainder Interest Trusts: Property is transferred into the trust and the donors enjoy income from it. The donor also gains a tax deduction for charitable contribution.
- Children’s Irrevocable Education Trusts: This allows your children to continue to higher education.
- Grantor Retained Annuity Trusts: Known also as GRATs, these trusts allow you as grantor to receive an annuity for a fixed amount of time.
- Qualified Personal Residence Trusts: With these trusts, you give away a principal or second home to your children and they rent it back to you.
- The Annual Gift Tax Exclusion: You are allowed to gift assets up to a certain dollar amount to others during your lifetime without estate or gift taxes. You do not forfeit your lifetime exclusion with this option.
If You Would Like to Set Up an Estate Plan
When creating an estate plan, it is very important that you fully understand the implications of each tool; therefore, you are urged to work with Kingwood estate planning lawyers who have experience working with clients like you. Call Peterson Law Group today at 281-609-0664 or 832-786-5062.