November 10, 2011, Bob Brinker's Moneytalk Guest: Estate Taxes

November 10, 2011......Bob Brinker's guest-speaker last Sunday on Moneytalk was Rachel Emma Silverman. Here is a very brief summary written by David Korn, posted here for you with his permission: 

David Korn wrote:

"Bob had on Rachel Emma Silverman, author of The Wall Street Journal Complete Estate-Planning Guidebook.”  Not too long of an interview, and kind of boring, but since it involves an issue that doesn’t come up too much I thought you would want the highlights so I summarized the key points below:

1. The federal estate laws keep changing, but in 2011 and 2012 the exemption — the amount shielded from estate taxes – is $5 million per person.  If you are a married couple, the total exemption is $10 million.

2. Before if a married couple wanted to take advantage of the full $10 million, the spouses would usually have to set up a trust.  Now, there is a portability element where a couple can take advantage of the full $10 million without the consequences and can avoid much of the headaches, costs and time to get that accomplished.

3.  About half the States in our country have their own estate taxes and many of their exemptions are much lower.  New Jersey, example, has an exemption of $675,000.  For a lot of people they might have a home that is worth more than that.  Bob said he thinks people will leave States where taxes are confiscatory.

4.  Rachel encouraged every single adult to write a will because if you don’t, your state government will decide where your money goes.  This is particularly important if you are in a relationship with someone, but not a family member or married and want to leave money to them.  The other group that needs a will is for those with young children so that you can name the guardian for your children.  Another reason to have a will is to address the issue of your health and to name someone as a power of attorney who can make decisions over your health care of finances.

5.  When you are thinking about your estate, here are the questions and goals to keep in mind:

• Do you want to leave money to family members and if so, in what percentages. Are there people other than heirs, such as good friends, who you want to leave money to?
• If you have young children, do you want to leave money in different amounts to them such as if your children have different needs or you are estranged from one child versus the other. 
• Do you want leave a charitable bequest, or create a charitable remainder trust that provides for regular payments. 
• Consider your animals.  It might sound silly, but make plans for your animals if you want them provided for. Keep copies of your documents.  
• If you have a lawyer, they should have a copy. Also keep a copy in a fire-proof safe at your house.

6. If you have debts, in general your family won’t be on the hook but it is dependent on state law. There are exceptions for things like student loans where your someone co-signed a loan.

7. Your estate includes whatever asset you have.  It is not just your bank account.  It is your ownership in businesses, property, and can include intellectual property, insurance, etc."

David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service. Copyright David Korn, L.L.C. 2011 November 7, 2011

Honey sez: (Here is THE LINK to my complete summary of last Sunday Moneytalk.)  David Korn writes a weekly investment letter.  David and Kirk Lindstrom also publish The Retirement Advisor. You can request complimentary issues of both newsletters at THIS LINK.

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