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November 30, 2011
November 30th, 2011 by

Federal tax law currently allows a five million dollar estate tax exemption. As a result, most households in America do not even have to worry about paying an estate tax when leaving loved ones real estate, stocks, or other assets. Unfortunately, unless congress votes to extend the law, the exemption will soon fall to one million dollars. If you’re concerned about the future of estate tax and plan to leave your family a large estate, you may want to consider survivorship insurance.

A survivorship life insurance policy is a bit different than other types of life insurance policies. Two people are insured but the policy only pays the death benefit when the second insured individual on the policy passes away. It generally costs less than two individual policies because the premium is based on the life expectancy of both parties. Also, it’s a good option when you don’t qualify for other life insurance policies due to age or medical conditions. This is not a good option, however, if you would like to leave a death benefit to your surviving spouse. For a balanced approach, consider purchasing term life insurance in addition to survivorship insurance.

Now, the proceeds from nearly any insurance policy are generally considered part of your taxable estate. If you want to keep the death benefit out of your taxable estate, you’ll need to set up an irrevocable life insurance trust. This will help ensure that your beneficiary receives the death benefit without being subject to excessive estate taxes. Don’t try to do this on your own! You should consult with an experienced estate planner as well as an estate attorney before proceeding.

November 22, 2011
November 22nd, 2011 by

Estate and Retirement PlanningIf you’re like most, your estate will go through a lengthy probate process following your death. While probate courts typically make distributions according to your wishes, leaving a valid will is absolutely essential if you have specific requests. This means that if you wish to leave your nephew a specific piece of real estate, a will is the only way to ensure that this is carried out following your death. Probate law largely comes from feudal laws of medieval England. As a result, there are a number of problems with the probate process that make it worth avoiding.

First, probate is a lengthy process. The settlement frame for most estates can be anywhere from 9 months to 2 years and, unfortunately, your heirs will be unable to access their inheritance until the probate process has been completed. Secondly, it’s not a free service. Though many states argue that probate “helps” an estate by ensuring that the wishes of the departed are carried out, it comes at a cost. Between six and ten percent of your estate, in fact, can be consumed by probate fees, leaving less for your heirs to inherit.

Finally, the proceedings of probate court are a matter of public record. Anyone with the time and desire could visit the courthouse and find out exactly how much you left to each heir, any debts you owed, and the size of your estate. If you don’t like the idea of airing your family’s financial information for the whole world to see, there are steps that you can take to ensure that your estate never even enters into probate. Proper estate planning allows you to pass your estate on to your loved ones privately and without undue expense or delay. Your best bet would be to consult with an estate attorney and ask about trusts.