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Is Your Estate In Order? 5 Key Takeaways to Consider


A new light has shined on the importance of estate planning in light of recent news that Aretha Franklin, who passed away August 16, did not have a will or trust.

Think about how you want your legacy to live on. Do you want to donate to charity, ensure your children and family are taken care of or pay for your grandchildren’s school expenses?

Although no one likes to think of death, having a will can ensure your legacy lives on and your loved ones are taken care of. Proper planning can avoid additional stresses, feuds and complications after your passing. Key to that is communicating to ensure proper measures are taken to fulfill your wishes, and working with professionals can help you protect your assets.

Here are five key takeaways to ensuring your estate is in order:

1. Talk to your CPA, wealth management advisor and attorney.

    Your CPA can educate you on tax and legal structures and advise you on how best to provide for your beneficiaries while minimizing the tax consequences. That may also include setting up a revocable trust.“ The estate tax is a tax on your right to transfer property at your death,” according to the IRS. “It consists of an accounting of everything you own or have certain interests in at the date of death.” The estate exemption amount for 2018 is $11.2 million, increasing annually for inflation. In addition, there is constant talk of changes to the estate tax system. With federal estate tax rates as high as 40 percent, proper planning can help avoid almost half of your assets going to the government after passing away.

2. Make gifts while you are living.

    Doing so can help you take advantage of some tax savings and reduce your total gross estate. Gifts can be made valued up to the annual gift tax exclusion amount each year without ever touching the lifetime estate exemption. The exemption amount for 2018 is $15,000. Consulting your tax adviser can help determine which assets should be distributed when – before or after death – to help beneficiaries receive the most benefits, which includes tax savings. While some assets should be distributed during life to take advantage of gift exclusions and reductions to taxable income, others should remain in the estate to benefit from an increase in value.

3. Find out your net worth.

    Evaluating net worth – either personal or business – with your accountant can help determine what your beneficiaries will be responsible for after death, whether filing an estate tax return will be necessary, and how to maximize your exemptions and deduction if required to file.

4. Determine who you trust to run your estate, and appoint an executor to help carry out your wishes.

    This person can be anyone you want; a spouse, child, adviser, partner, friend, etc. Appointing someone you trust can be key when hard decisions need to be made regarding residual assets or where money in the estate needs to be spent. Without appointing an executor, it is possible that your estate could fall into the hands of the government, who might not have your best interests at heart. It’s also important to have your will include a line of possible executors in case your original appointee proceeds you in death, declines to accept the position, or becomes mentally incapacitated.

5. Don’t be afraid to adjust your wishes.

    Legal estate documents are filed and notarized but not set in stone. Changes can always be made; life happens, new family members are added, wishes change. Just because you are leaving your estate to an heir doesn’t mean you can’t still enjoy your time left.

Periodically update your accounts, especially after major life events such as death, marriage or births to ensure assets aren’t distributed to the wrong people, which can cause hassle, confusion and even lawsuits after death.

If you’d like to learn more about creating – or updating – your estate plans, including determining your net worth and the most beneficial way to distribute your assets, please contact your Ericksen Krentel tax professional or email us.

About Ericksen Krentel

Ericksen Krentel CPAs and Consultants, founded in New Orleans, Louisiana in 1960 with offices in New Orleans and Mandeville, believes that serving as the clients’ most trusted adviser is grounded in going beyond the numbers.

That includes helping clients achieve their business and personal financial goals by providing innovative and exceptional services in the following areas: audit and assurance services, tax compliance and planning, outsourced CFO services and business valuations for a variety of industries; employee benefit plan audits; fraud and forensic accounting; business planning; IT consulting; loss calculations; and estate planning.

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