Are readers are already familiar with the uncertain state of estate planning beyond 2013. Currently, the federal estate tax is set to go through some changes in 2013 unless action is taken before then. That means that until 2013, individuals are not subject to federal estate tax unless their estate exceeds $5 million, or they may give up to $5 million in gifts without paying federal gift tax. That amount is $10 million for couples.
While it is still a mystery as to what lies beyond 2012, there are still a number of aspects of estate planning that are still certain and well worth putting into your estate plan.
Health care powers of attorney are an important aspect of estate planning as this will be the individual that represents your medical interest to doctors should you become incapacitated. In many states, you will also need a living will, which informs medical staff how they are to care for you in certain medical situations. In some states, health care powers of attorney and a living will are combined in a single document called an advance health care directive. In these, you provide instructions for you care and appoint an individual to exercise judgment on your behalf should you be unable to do so.
Financial powers of attorney are similar to the health care power of attorney, except that they handle your financial affairs should you become incapacitated. As far as who should be selected there is any number of possibilities. Whoever it is, the person selected should be someone you trust and someone you believe is capable of handling your finances and investments.
Wills and trusts are considered essential documents to have in an estate plan. Property can be placed in a trust to reduce your taxable estate and to keep it out of probate. These are very useful tools for a number of estate planning strategies.
Gifting is another great estate planning strategy, though the amount one may give fluctuates with the gift tax exemption, which will change in 2013. This and the other suggestions noted here should be discussed with an experienced estate planning attorney to determine how they can fit into your unique estate plan.
Source: AARP, “A To-Do List for Estate Planning,” John F. Wasik, October 19, 2011.