Many residents of Texas and people living throughout the country are not worried about the federal estate tax these days. For example, a married couple can exempt up to the first $10,680,000 in assets from the tax. It’s roughly half that amount for a single person. However, the need to do estate planning is not lessened just because your estate may not be exposed to a federal estate tax at death.
First of all, the amounts of the exemptions tend to change based on who is in power and how the economy is turning. By the time of death there may be a much smaller threshold amount required to incur a federal estate tax. Furthermore, state inheritance taxes may be based on a much smaller threshold amount. Even modest estates may have to pay a state death-related tax.
Secondly, there are several other important reasons to engage in estate planning and to get a package of legal protections in place. There are a number of legal documents that are extremely helpful in the event of severe disability or mental incompetence while the individual is still alive. For example, a durable power of attorney made by the individual while healthy will avoid extra expenses and drains on the person’s assets in the event of incapacitating disability. The trusted family member or other loved one named in the power of attorney will take care of the maker’s affairs while he or she can’t do it for themselves.
Estate planning, through wills and trusts, also gives the individual the power to declare the disposition of the assets in the specified ways and to the specified persons that he or she desires. Otherwise, the state could make those designations itself, which could be costly and also against the person’s wishes. If you are a Texas resident contemplating an estate planning package, one effective way to begin is to select an experienced estate planning attorney. From there, an initial meeting going over all of the relevant documents and details will go a long way in getting the process started off on a strong footing.
Source: citizensvoice.com, “IN THIS CORNER: Estate planning strategies not for just wealthy“, Christopher D. Ross, Dec. 14, 2014