The New Estate Planning

Before the Federal gift and estate tax credit grew to its current $5.49 million, avoiding estate taxes was the primary goal of individuals and couples of even modest wealth.  Today, many who might have already had an estate plan in place are putting it off.  Without the prospect of paying significant taxes, there is no urgency to plan.

While the estate tax will affect only a handful of people that need to employ strategies to avoid the “death tax”, there are whole set of issues that require thought and planning.  These include insuring the step-up in basis for assets upon the surviving spouse’s death. People should plan for living longer and eventual incapacity.  How will you pay for health care? How will you pay for long-term care if you need it. With the demise of the pension, retirees need to generate income from their savings.  Opportunities to maximize social security benefits should be examined.  If you are charitably inclined, there are ways to give that are better than others.

This is the new estate planning.  Instead of sheltering assets from tax, planning will require taking a strategic view to what you own and how it will work for you in the last years of your life. If you want to, deciding what legacy you will leave to your heirs will need planning.  Interestingly, most of these issues don’t require a lawyer’s services.  A Certified Financial Planner® would be a better choice.

Some assets, like life insurance and annuities, could be repositioned to pay for long-term care.  Investment portfolios may need to be rebalanced to focus on distribution rather than accumulation.  For those with sizable assets in IRAs and retirement plans, care needs to be given to distributions to limit taxes and avoid depleting assets during down markets.

If these are things you would like to discuss in more detail, please give me a call.