The death of music icon Prince on April 21, 2016, presents an example for estates of all sizes of the privacy an estate plan can provide. Last week, Prince's sister, Tyka Nelson, filed a petition with the Carver County, Minnesota probate court stating Prince did not have estate planning documents to direct the management and disposition of his estate. As a result, the administration of his estate will be a matter of public record, easily accessed by the media. Reporters will be able to find a list of all of Prince's assets, the values of such, the names of beneficiaries inheriting, as well as exactly how much and which assets they will receive. This is an unfortunate posthumous development, considering just how private the artist appeared to be in life.
An estate plan isn't generally something that people are excited to talk about, but it is something that everyone needs to do at some point in their lives -- preferably sooner instead of later. An estate plan will ensure that your wishes are carried out in the event that you pass away or become incapacitated.
With graduations in full swing and high school seniors preparing to leave home for college, employment, or other adventures, it may be time to consider estate planning documents for your 18 year old. It may not initially make sense for an 18 year old to need an estate plan since most do not have significant assets. However, in most states, an 18 year old is an adult, with legal rights relating to privacy and decision making. As soon as a child turns 18, parents will lose authority to view medical and financial records related to the child, as well as be prevented from making decisions on their child's behalf.
For decedents dying in 2015, the applicable exclusion amount (or the value of assets a decedent may own without incurring an estate tax liability) is $5,430,000.
Aside from prurient interest in a celebrity's estate plan, there is often a lesson to be learned in the structure of the estate plan of the wealthy. The passing of fashion icon Oscar de la Renta on October 20, 2014 is a reminder for all business owners, no matter how large or small the company, to put a succession plan in place to insure the ongoing success of the business.
On October 31, 2013, the IRS issued Rev. Proc. 2013-35 in which it announced that the Unified Credit Against Estate Tax for decedents dying in 2014 is $5,340,000 per person. This is a $90,000 increase for inflation. The IRS also confirmed that the annual gift tax exclusion amount will remain at $14,000. Rev. Proc. 2013-35, which can be found here, announces all inflation-adjusted items for 2014 taxes.
The Financial Awareness Foundation is celebrating the 5th Annual Estate Planning Awareness Week October 21 through 27. According to the Foundation's website, it is estimated that over 120 million Americans do not have an up-to-date estate plan to protect themselves, and their families, making estate planning the most overlooked aspect of personal financial management. Estate planning (as well as other financial planning) is not just for the wealthy; with advanced planning issues such as guardianship of children, management of assets and bill paying during incapacity, care for special needs children, and distribution of retirement assets can all be handled with thought and care, often at a reasonable cost. Use Estate Planning Awareness Week as an opportunity to consider your family's need for an estate plan, or to review your existing estate plan, and put your wishes in writing.
It may not initially make sense for an 18 year old to need an estate plan since most do not have assets about which to be concerned. However, in most states, an 18 year old is an adult in the eyes of the law, with legal rights relating to privacy and decision making. As soon as a child turns 18, parents will lose authority to view medical and financial records related to the child, as well as be prevented from making decisions on their child's behalf.
People often assume that an estate plan is only necessary for those with a certain level of net worth. The reality, however, is always everyone needs an estate plan, regardless of the value of the assets. There are so many reasons to establish an estate plan, none of which have any relevance to the value of your estate. Below are four good reasons:
There is one simple estate planning tool you can accomplish immediately and without having to call a lawyer-updating your beneficiary designations.