Questions From Listeners: Estate Planning

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Michael Jackson's Last Will, Estate Planning

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420x316-grad-lee Dee Lee
Dee Lee is a Certified Financial Planner who received a diploma in...
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BOSTON (CBS) – Before we begin, a heads-up on a new Money Matters newsletter. So many listeners call or e-mail that they have missed a segment or only heard part of the segment. So we have solved that problem; now every Monday morning you can get the previous week’s segments sent to you. To sign up you will need to go to cbsboston.com/newsletters.

Question:  One of my New Year’s resolutions is to get my estate planning done his year. But I have read that the exemption amount will change the first of next year. Should I wait?

Answer:  Short answer: “no”. We don’t know when we are going to die. So you put together a will as if you were going to die the day after you sign it.

The longer answer:  The federal estate and gift tax exemption is currently $5,120,000. That’s the amount of money federally that you give away without incurring an estate tax. That number will revert to the 2001 figure of $1 million on first of January 2013.

Now of course, Congress could very easily step in and change those numbers again. So when you do your estate planning your attorney will help you plan for this year and whatever Congress might do.

If you have lots of money, you might consider giving some of it away this year or possibly gifting it to an irrevocable trust for your heirs. But once you give it away you can’t get it back!

Massachusetts no longer follows the Feds and the exemption for Massachusetts is $1 million. Now you can leave everything to a spouse without incurring federal or state estate taxes.

Before you sit down with the attorney, do your homework. If you are coupled this is a good time to have a chat about death and dying. This is not a conversation for ONLY the very old or infirmed. We are all going to die someday. We just don’t know when!

You will need to figure out your net worth. If you are married, how are those assets owned? Who do you want to inherit your assets, your belongings? Do you have a charitable intent? Do you have minor children? Have you given any thought to a guardian for the kids?

Who would you ask to be your executor? What about your power of attorney? You want someone you trust. Your spouse, sibling, an adult child.

Now think about your Health Care Proxy. Who cares enough about you to be your advocate? Who do you trust to make decisions for you if you no longer can make them for yourself?

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