While the nation is still debating healthcare reform, Americans face a bigger problem. Seventy-eight percent of Americans own a home and fifty-five percent of Americans have minor children living in the home, yet less than half the country has signed a will, and much less the other documents that make up a complete estate plan. Some of us may need long-term care and some of us may not, but the only two certainties in life are death and taxes. While we at Wild Felice & Pardo can’t help you live forever, we are very good at limiting the amount of taxes your family will have to pay after you’re gone.
Did you know that the estate tax threshold could be as low as $1 million in 2011 and the estate tax could be as high as 55%? $1 million sounds like a lot of money, but when you consider that the amount of life insurance you have is added to your estate immediately upon death, $1 million can quickly sneak up on you. You work all your life earning a salary. The government taxes that salary between 20 and 35 percent. Then after you’re gone, the government takes an additional 45 to 55 percent of what you left behind. Nearly 80 percent of what you earn in your lifetime will go directly to taxes unless you take the time to sit down with a lawyer and write your estate plan.
There are five components to a basic estate plan:
Willpower: A legal declaration by which a person, the testator, appoints one or more persons to administer his estate and provides for the transfer of his property at death.
Living will: A written document that states a person’s wishes regarding life support or other medical treatment in certain circumstances, usually when death is imminent.
Legal power: A written authorization to an agent to perform specific acts on behalf of its principal. This can be granted as a general or limited power of attorney.
health care surrogate: An adult designated to make health care decisions for you when you are no longer able to do so for yourself.
HIPAA designation: A written document that allows certain designated people to have access to your medical records.
In addition, there are also multiple trusts and other products for greater control and reduction of wealth tax. If you have a spouse, child, own a home, or want to leave a legacy of any kind, you need to speak with an attorney to get your will and other estate planning documents in order. It is vitally important that you do not put this off any longer. None of us can control how much time we have left, but we can control how loved ones are cared for when that time comes.