Estate Planning
At Colorado West Investments, we cover estate planning with all of our clients. If need be, we will meet with a client and his/her estate planning attorney to generate a sound estate plan that minimizes estate taxes and maximizes benefits to heirs.
Estate Planning
Estate planning is a process that ultimately spells out how you want your assets distributed after you pass.
It can be simple or more complicated in nature but generally involves the generation and maintenance of essential documents such as:
- Will and Trusts
- Beneficiary Designations
- Powers of Attorney, specifically the durable Financial Power of Attorney and the durable Medical Power of Attorney powers of appointment
- Advanced Medical Directive (Living Will)
Many people (and even some attorneys) confuse a living will with a durable medical power of attorney. A living will sets out directives concerning end of life decisions, whereas a durable power of attorney gives all medical decision making authority to an appointed individual upon incapacity, including end of life decisions. Some people have both a living will and a medical power of attorney.
Doing it Right
A good estate plan will also consider how assets are titled between husband and wife so as to maximize potential step-up in cost basis and to minimize capital gains and estate taxes.
All estate planning documents should be immediately reviewed upon:
- Changes in Federal or State Death Tax Rules
- Significant changes in Financial Circumstances and/or Family/Heir circumstances
- Changes in your wishes
- Death of your spouse
Changing the Rules of the Game
The federal estate tax has been permanently repealed on three separate occasions in U.S. history. Under EGTRRA (part of the Bush Tax Cuts) estate tax laws are in a state of change.
Under current law, Federal Estate tax exemption amount :
- Was increased in 2009 from $2 million to $3.5 million
- Will be unlimited in 2010
- Will drop back down to $1 million per person on January 1, 2011 and adjusted for inflation thereafter
Currently, President Obama and Congress are looking at repealing the Bush Tax Cuts, which will automatically expire in 2011. Estate tax exemption amounts are scheduled to go back down to previous levels of $1 million if Congress takes no action. However, in early June 2008 Congress passed a non-binding budget resolution for the fiscal year 2009 in which both the estate tax exemption and maximum estate tax rate would be frozen at their 2009 levels of $3.5 million and 45 percent, respectively.
Going forward, it’s a waiting game to see where estate tax rates and exemption amounts will settle.
