Will or Trust – Just Do It

Greetings fellow Villagers.  Bill and I would like to take this opportunity to wish all of you a Happy Valentines Day.  This month, we feel that it is important to address the importance of creating a will or a trust.  With the new changes in the “death tax”, it is a subject we believe should not be ignored.

What is the new tax law?  As of January 1st, 2011, should your estate be worth more than 1 million dollars, the estate will be subject to a 55% federal tax.  Translated, if, when you die, your estate, (home, properties, savings, insurances,401k’s, IRA’s, stocks and bonds, cars, boats, trailers, etc..) is worth 1 million and 1 dollars, you will be taxed $550, 000.55.  This is over half of your estate.  Please be aware that you or your loved one have already paid federal and state taxes on what you (they) have accumulated.  Once you consider everything you own; your property, your checking and savings accounts, insurances, investments, cars, collectables, etc…, you may be surprised that it doesn’t take much to reach 1 million dollars.  In order to pay these taxes, property (properties) may need to be sold and other possessions liquidated to satisfy your tax liabilities.  Just thinking of what has happened to the economy in the last 3-4 years; this change in the death tax is like adding insult to injury.  Many will say, “No problem, I don’t have over 1 million dollars, so I don’t have to do anything.”  Like my mother would tell me at times; “That’s a bad attitude. Do something!!”  You see, I was raised with the attitude that “If it is to be, it’s up to me!”  In other words, please don’t assume things will just work there way out without you taking action.  Next to God, you are your next best protector.

Having a will allows you to leave all of your assets to your family, charities and others that you wish to benefit.  A will also allows you to name a guardian for any dependant children in the event something happens to you.  You can spell out all of your wishes and name your beneficiaries.  With a will, probate may still be necessary.  This means that there will then be a charge for a probate attorney and court costs that go along with it.  Doing nothing only lengthens the time it takes to go through probate and increases you attorney and court fees.

We have heard that with the new law, previously set up funding formula clauses and trusts may no longer be applicable given the new $5 million federal estate tax exemptions.  The fact is, the laws are so hard to interpret that you don’t want to “assume” anything

No, we are not attorney’s, however, we ourselves have experienced loss and both of our parents created trusts, which allows you to provide for your dependent children, spouse or partner financially, while protecting your assets from creditors and applicable taxes.  When you create a trust, you will need to name a trustee, who will oversee the trust

Whether it is a will or a trust you create, whomever you name to oversee them, should be someone you truly trust.  With both, a will or a trust, you should name a secondary person you trust just in case your “first choice” be unable to execute the estate plan.

If you have life insurance and retirement assets, it’s best to name your primary and alternate beneficiaries directly, as opposed to your estate, to bypass income taxes.  To date, if life insurance is left to a specific individual, it is not subject to estate taxes.

Currently, the state of Arizona does not have an estate tax at the state level, but there is still the federal death tax.  If you are a resident of another state or have real estate property in another state, that state, like many, may levy taxes that apply.

In short, it is important to take another look, or perhaps your first look, at your goals and your intentions for when you go home to be with the Lord.  Based on the economy, and perhaps how your family has grown, you may have new goals or wishes that need to be accomplished with your estate plan.  You may need to consider financing college educations, creating a business succession plan, providing for a special needs

child, or retaining a vacation home.  Whatever it is, we can only pray and encourage that you do something.

Remember, the federal government isn’t ruled by the same “heart” that you have and, as you can see by the new federal death tax law, is not considering your spouse, other loved ones, or your valued charities.

You can create your own will or trust simply by going to legalzoom.com or purchasing a program for your computer that will walk you through the entire process.  It will be money well spent and saved!!

 

We thank you for taking the time to read this article and hope that the information provided is not only helpful, but gives you the extra push you need to get your affairs in order.  May God guide all of you and richly bless you.

As always, Bill and Ingried Lowman are available 24/7 at (602) 276-3601, toll free at (877) 276-3601, fax number at (602) 276-1889 or our new website at lowmansarizonafuneralhome.com.

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