Tax Tip of the Week
September 29, 2008


Don't neglect your estate plan

You've probably heard that estate taxes are scheduled to disappear in 2010. Whether that will actually happen is anyone's guess.

One thing is sure: Leaving your estate plan in limbo until then is not a good idea. Fortunately you can take steps now to protect your loved ones.

Here are three.

Trusts.

Assess your trust documents to make sure the wording continues to achieve your goals.

For instance, say you've established a trust to maximize the amount that passes estate-tax-free to family members. This type of trust typically makes use of formulas tied to the estate tax exemption.

Because of tax law changes - such as the increase in the federal exemption from $2 million in 2008 to $3.5 million in 2009 - funding the trust may require more assets than you expected, leaving other beneficiaries shortchanged.

Wills.

Have you moved to a different state? Is the person you chose as your executor still willing and able to serve?

When you update your will to reflect changes like these, also revise language that references specific dollar figures or outdated state or federal tax laws.

Beneficiary designations.

In addition to controlling how your retirement accounts, pension plans, and insurance policies are distributed, beneficiary designations can impact both income and estate taxes.

As an example, if you have an IRA, your choice of beneficiary affects the length of time for taking distributions after your death. A longer time frame for withdrawals allows your account to continue growing while deferring tax.

Updating your estate plan also includes reviewing gifting strategies, checking the titling of investment accounts, and making provisions for nontraditional family members. Call us today if you would like a more complete evaluation of your situation.

Questions for our Financial Expert?
E-Mail us at: finance@ClevelandSeniors.Com