Estate Planning Strategies Not Just For The Wealthy

Dated: 06/24/2015

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Estate Planning Strategies: Not for Just the Wealthy

Regardless of what your estate may be worth, you need to plan

If you are not confident about whether your family would have to pay federal estate taxes if you died tomorrow, chances are you can gain confidence. Unless your estate is worth more than $5,340,000 in 2014, it won’t incur federal estate taxes. (If you’re married and federal estate taxes remain a concern, keep in mind that proper planning may allow you and your spouse to shield up to $10,680,000 from these taxes.)

If federal estate taxes aren’t an issue, you may be wondering whether you need to bother with estate planning. The answer: Yes, you do. Here are three reasons why:

First, many states impose their own estate or inheritance taxes that kick in at lower levels than the federal estate tax and may affect your family. 

Second, estate planning is about more than what happens after you die. Documents such as a durable power of attorney, health care power of attorney, and living will help protect you and your assets if you should become incapacitated and need someone to make decisions for you while you’re still alive.

Third, an estate plan strategy helps ensure your assets – no matter how much or little you may have – are distributed according to your wishes. If you die without a plan, your state’s laws will dictate who gets your assets, which is unlikely to match your wishes. Take something as simple as a savings account. If it’s held in your name alone, the probate court will determine what happens to that money – regardless of the fact you told one of your children, for example, that he or she would get it.

A good place to begin is by finding an estate planning attorney licensed to practice in your state. Ask friends, relatives, your Financial Advisor, etc., for references, and find one you’re comfortable working with.

One essential estate planning document is a will that spells out whom you want to get your assets, like that savings account or the vintage sports car, titled in your name, that you and your daughter restored and you want her to receive.

Keep in mind that you probably have accounts, such as a 401(k) and IRA, insurance policies, and annuities that include beneficiary designations. These designations supersede what you indicate in your will. In other words, your will may say your 401(k) should be distributed evenly among your children, but if the beneficiary designation on the account indicates that it’s to go to your ex-spouse, your ex-spouse will get the account. That’s why it’s essential to regularly review your beneficiary designations to ensure they are up-to-date and align with your overall estate plan.

Although a will needs to be filed with the probate court after your death to be effective, using a trust can help you avoid probate, pass your assets as you intend, and keep matters private. (Probate is a public process.) Various kinds of trusts can provide for continued management of your investments if you become incapacitated, ensure your assets are distributed in an orderly fashion when you die, plan for minor and/or incapacitated children, and fulfill your charitable goals. You’ll want to talk with your attorney about the type of trust that best meets your and your family’s needs.  

For 20+ years Dan has been working with individuals, families, and business owners to help plan their financial futures, protect and grow their current assets, create an income stream when needed, and do it as tax efficiently as possible.   

Daniel Morris 

Financial Advisor at Wells Fargo Advisors, LLC 



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J. Philip Faranda

J. Philip Faranda is broker and owner of J. Philip Real Estate in Briarcliff Manor, NY, which he founded in 2005. The firm is, by transaction total, the top-selling true independent Westchester and Pu....

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