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Making a simple will has benefits over and above tax savings

On Behalf of | Nov 26, 2015 | Wills

Although federal estate tax consequences for a single person are nonexistent until the estate exceeds $5.45 million in assets, there are many other reasons why estate planning should be carried out for those Texas residents who are not in that high tax bracket. First, state assessments may impact the estate.  Also, the federal exemptions may be lowered at any time that Congress decides to make a change. Such factors and others make it advisable for most people to have at least a simple will to frame their estate upon death.

A will is a versatile document that may do quite a bit more than just deal with tax issues. In it, a testator can provide for various results that are personally preferred. Without it, the state will dictate distributions and procedures for the estate that may not be economical and not what the testator would have wanted. Without a will, it is more likely that excessive and wasteful fees will be incurred.

By making a will, a testator can designate a portion of the net assets to those relatives, friends and charities that the testator prefers to benefit. Otherwise, some of those may receive nothing or far less than intended or desired by the decedent. Additionally, where the individual has reservations about the ability of certain heirs to handle money or assets, a testamentary trust may be established.

In that way, distributions may be gradually released with instructions to the trustee to use the funds only for the beneficiary’s health, education or welfare. The main corpus of the trust may be held until the beneficiary reaches age 21, 25 or it may even be held for a longer period if desirable. There are numerous tax consequences in Texas and federally that arise in the administration of significant trusts, and that should be a topic for the testator to go over with the estate attorney and financial advisers while preparing the estate plan and the simple will.

Source: money.usnews.com, “5 Estate Planning Strategies to Keep Your Money in the Family“, Maryalene LaPonsie, Nov. 19, 2015


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