There is no one universal estate plan that would be ideal for everyone. The facilitation of asset transfers will certainly be at the core of the endeavor, but there are various different ways to go about it. The most important document for one person may not be relevant to the next.
For example, there is a federal estate tax that carries a robust 40 percent maximum rate. You can transfer unlimited assets to your spouse tax-free if you are married to an American citizen, but transfers to anyone else are potentially subject to the death tax.
This tax is only a factor for high net worth individuals, because there is a rather large credit or exclusion. The exclusion is the amount that you can transfer before the estate tax would become applicable. For the rest of 2015, the exclusion is $5.43 million, but it is going up to $5.45 million next year after an inflation adjustment is applied.
Wealth preservation will be very important to someone who is exposed to the estate tax. There are different types of irrevocable trusts that can be used to gain estate tax efficiency, but these trusts would not be appropriate or necessary for people who are not exposed to the estate tax.
Special Needs Planning
If you have a loved one with special needs in your family, a supplemental needs trust could be a very important estate planning document. Assets in this type of trust can be used to make a loved one more comfortable without impacting eligibility for government benefits like Medicaid and Supplemental Security Income.
Another situation that would call for a specialized brand of planning is the blended family scenario. If you have children from another marriage, and you are getting remarried, you are probably going to be concerned about the interests of your children.
Under these circumstances, you could potentially provide for your spouse and your children through the creation of a legal document called a qualified terminable interest property trust. This would be very important for you, but this type of trust may be totally unnecessary for someone who is in a different situation.
Custom-Crafted Estate Plan
We have looked at a few different potential scenarios, but there are many different circumstances that can exist. This is why personalized planning is very important.
If you consult with a licensed estate planning attorney, you can explain your family dynamic, your financial situation, and your overall objectives. Ultimately, you can work with your attorney to craft an estate plan that is perfect for you and your family.
Our firm can help if you are ready to get started. Take the first step by registering to attend one of our upcoming Living Trust Seminars at the following link: Naples FL Estate Planning Attorney.