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Today we have a guest post from Leslie Paul, a tax attorney located in Northern Virginia. Ms. Paul is a former attorney for the Internal Revenue Service. Today she focuses her practice on working with individuals and small businesses. Her practice areas include tax, wills, trusts, estate planning, health savings accounts, and more. You can visit her firm's website Leslie Paul Law to learn more.
Estate Planning Basics
This article will introduce you to some basic concepts of estate planning and explain why you need to establish a plan, no matter the size of your taxable estate.
It does not matter if you are not subject to an estate tax. Establishing a comprehensive estate plan will ensure that your assets are handled the way you desire, in a manner that best suits your specific needs. And it may even help protect you in the event the law changes.
State law determines two things:
- Where your assets and possessions go after you die; and
- Sets the state estate tax.
Federal law determines the Federal estate tax. Right now, everyone has a personal exemption amount of $5.43 million. This is indexed for inflation. So, in 2016, the exemption amount will increase to $5.45 million. The tax rate on estates in excess of the personal exemption amount is 40%.
How Having a Will Helps
Regardless of whether your assets will be enough to trigger either a state or federal estate tax, you may want to make sure they go to who you want to receive them. This is especially true if you want to ensure a precious heirloom is provided to the right person.
Additionally, having a will in place greatly simplifies the process of administering your estate.
And, if you have young children, you can also use your will to appoint the appropriate guardian. This provides some comfort in the event of a tragic accident.
Do I Need to Hire A Lawyer?
There are a lot of do-it-yourself legal websites available. And they are very appealing to a lot of people. You can draft a Will for as little as $99.
So, why should you hire an attorney when you can do it simply and easily, and for a lot less money? Your situation is simple, isn’t it?
A website provides no personalized service. There is no one advising you, based on your situation and your circumstances. And no two people or families are the same. There are different needs and different goals when it comes to estate planning.
An estate planning attorney will sit down with you and discuss your goals, similar to a financial planner.
A “simple” situation may be more complex that you think.
Do you have fiscally irresponsible parents that may need to be taken care of financially in the event something happens to you? But you also want to make sure your children receive the bulk of your assets?
A website will not help you decide the best person to serve as your Executor, nor will it encourage you to name an alternate. A website cannot help you work through a variety of situations.
What about the unique needs of blended families? A married couple who each entered a marriage with children, who then have more children together, will have planning needs that cannot easily equate to a formula found on a website. Custody and guardianship are concerns. There are also financial concerns to ensure everyone’s needs are met.
The internet has made our lives much easier. However, easy is not always the best method.
The Bottom Line
Not everyone realizes the importance of having a will and establishing a personalized estate plan.
Some believe they don’t have enough assets. Others think the law will distribute their estate. However, the law is constantly changing, and there is a wide array of laws that applies to estates on both the Federal and state level.
The only way to ensure your estate is handled as you desire is to establish a comprehensive estate plan.
If you are an individual or small business owner located in Northern Virginia, and you wish to learn more about estate planning or other tax related issues, you can contact Leslie Paul through her website by clicking on this link.