It's Easier to Hit That Taxable Estate Amount Than You May Think
Everyone that owns anything really should have at least a simple estate plan. A simple plan may include a will that provides direction on how assets should be handled upon our death. It may also include an advance health care directive with instructions on how we want our medical care handled in the event that we can’t make our own decisions.
A thorough estate plan includes more than simple directions, like who gets the car, the furniture or the family heirlooms. We want to pass on the best possible inheritance to our heirs, and this means that we shouldn’t pass over the question of estate taxes. The truth is that it is a conversation a lot of people erroneously assume that they don’t need to have.
The current exemption from federal estate taxes probably seems high to a lot of people. For the year 2014, only those estates with a taxable value of over $5.34 million will be subject to pay the federal estate tax. Even though that number seems astronomical to some, it is a lot easier to hit than a lot of people probably think.
That taxable estate includes nearly everything. This means that our very tangible personal property is included, like the furniture and car mentioned above as well as our house, boat, artwork, silverware and more. Money held in a bank account is included, but so are investments, stock options, retirement plan assets and life insurance. How much will your life insurance policy pay out in the event of your death?
All of these items add up, and a tax conversation is one that individuals in California should have with an estate planning attorney. Even those that know their assets don’t quite add up to that amount should consider this conversation. Why? Are you planning on earning more money, allowing your retirement accounts to continue to grow?
Not only do our finances change, but the law does as well. At almost any point in time, lawmakers could decide to change that exemption amount. The point here is that the estate planning conversation is not only one that people should have, but it is an ongoing conversation as well.