If you’ve read anything about the estate tax under the new Tax Law, you probably know that it won’t apply to you as an individual unless you have more than $5.25 million. If you are a married couple, your estate has to be larger than $10.5 million before you even begin worrying about having to pay an estate tax.
So if the estate tax exemption limit is so high, do middle-class families need an estate plan?
Absolutely. And here are three reasons why.
Estate planning is important for all persons, but especially important for blended families. If one or more spouse has children from a previous relationship, both spouses need an estate plan to ensure that all the couple’s children receive inheritances that their parents desire. Further, you need to make sure you update your estate plan if your previous plan had taken your previous spouse into consideration.
Estate planning isn’t only about protecting your assets from possible estate taxation, it’s also about guarding against unnecessary expenses. A good estate plan will allow you to pass property outside of probate, while not having a plan will almost guarantee that you will lose at least some money to the probate process.
Protecting Your Choices
All estate plans are essentially about making choices. California allows you to make medical choices ahead of time against the possibility that you could become incapacitated. A good estate plan addresses this possibility and not only protects your medical choices, but also protects your financial desires as well.