If you haven't done so already, today is the day to begin planning your estate. Thinking ahead can save you many tax dollars, and with estate tax rates as high as 45 percent, this should be of primary importance to you. In addition, you want to control the disposition of your property at death.

Below are some tips to help you make certain your estate is properly planned.

1. Update Your Will or Living Trust
Your will or trust is the most important component of your estate plan. It is the basis for distributing the majority of your assets. Your will or trust should be updated every three to five years and also after times of personal change, such as marriage, death, divorce, birth, adoption, inheritance or a move to another state. Remember that tax changes occur often and may alter the effectiveness of your existing estate plan.

2. Choose an Executor or Trustee
Think long and hard about the individual or institution named to act as your executor or trustee, bearing the responsibility of carrying out your wishes after death. You will want to name someone you trust implicitly, someone who is experienced to act. You may consider naming a loved one along with an experienced financial institution.

3. Name a Power of Attorney
Assign someone to act for you to handle your financial affairs in the event that you are unable to do so yourself. Property can also be managed, and disposition rights granted, through a durable power of attorney.

4. Create a Living Will
Draft a living will that makes your wishes known regarding extraordinary measures for keeping you alive. A living will allows decisions to be made when you are unable to communicate your wishes. This document can help family members who may be distraught make decisions based upon your stated wishes. You should inform your family members of your wishes in advance.

5. Check Up on Insurance
Evaluate your insurance periodically. Make sure that you have enough to cover changing needs.

6. Watch Your Investments
Commit to learning more about investments. Your finances are your future, and the more you learn, the easier and more interesting it becomes.

7. Give a Gift
In addition to the estate tax exemption, which currently allows you to have an estate worth up to $2 million without paying federal estate taxes, you can lessen your estate taxes by taking advantage of the $12,000 annual gift exclusion. This exclusion allows you to give up to $12,000 to any number of individuals each year without paying the gift becoming subject to gift tax. Spouses can combine their annual exclusion and give $24,000 per year to any number of individuals.

8. Be Charitable
An unlimited amount of money can be given to a qualified charitable organization such as Metropolitan State University Foundation during your lifetime or at your death, free of federal gift and estate taxes. Charitable gifts are an important component of any estate plan and may be especially helpful for people who do not have heirs to consider when distributing their estate.

Through gifts to a charitable organization, you can benefit during life and at death-and reduce your taxable estate as well. Just call us if you'd like more information.

Please contact Deb Vos at 651-793-1802 for more information.

Recommended Reading

  • A Will: The Basics and Beyond
  • Estate Planning for Couples
  • Essential Documents Everyone Should Own

Copyright © The Stelter Company, All rights reserved.

The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.