Your Estate Planning Checklist

What You Need to Know About Estate Planning

Like most items on your financial planning agenda for 2009, your estate plan is standing on shifting ground. This year, the estate tax exemption jumped from $2 million in 2008 to $3.5 million per person. Under current law, the estate tax is to be repealed entirely in 2010, only to come back with a much lower exemption in 2011, although many believe that the law will be changed before the repeal goes into effect. Such uncertainty comes at a time when the value of stocks and real estate has decreased markedly. If there ever was a time to review your estate plan, 2009 is it.

Estate Planning Tax Concerns 2009

While the limits on these tax provisions are subject to change, be sure that you understand how they work and how you can best apply each to your own situation.

  • The estate tax exemption, which is $3.5 million in 2009 ($7 million for couples), allows you to shelter a portion or all of your estate from taxes.
  • The lifetime gift tax exemption is for individuals who are interested in making substantial gifts (of up to $1 million) during their lifetimes without paying gift tax. The lifetime exemption is tied to the estate tax exemption, so any amount gifted as part of the lifetime gift tax exemption reduces the amount that can pass free of estate tax to beneficiaries upon your death.
  • The gift tax exemption allows you to give a set amount each year ($13,000 in 2009; $26,000 for couples) to as many people as you like without triggering the gift tax. This is an unrestricted gifting strategy that is not related to either of the other exemptions, so be sure to make full use of this “freebie” every year.

Estate Planning Checklist

Estate Planning Checklist

Estate Planning Checklist

Because you’ve worked hard to create a secure and comfortable lifestyle for your family and loved ones, you’ll want to create and maintain an estate plan that allows you to minimize estate taxes and preserve more of your assets for those you care about.

Use this checklist to evaluate where your estate plan stands today—or as a starting point for discussions with an estate planning professional.

Part 1 – Communicating Your Wishes

YES NO
Do you have a will?
Have you named executor(s) and trustee(s)?
Have you considered a living trust to avoid probate?
YES NO
Have you considered a living will or health care proxy in case of catastrophic illness or disability?

Part 2 – Protecting Your Family

YES NO
Does your will name a guardian(s) for minor children?
Do you have the right amount and type of life insurance?
Have you considered the various trust options (e.g., living, revocable, irrevocable, life insurance)?

Part 3 – Reducing Your Taxes

YES NO
If you are married, are you taking full advantage of the unlimited marital estate tax deduction?
Are you (and your spouse) making gifts to family members that take advantage of the annual gift tax exclusion, which is $13,000 ($26,00 for couples) in 2009?
Have you considered a Roth IRA, which in some cases allows you to pass assets to heirs tax free?

The estate tax exemption amount for 2009 is $3.5 million ($7 million for married couples). Under current law, the estate tax is to be repealed in 2010 and the exclusion amount is scheduled to revert to $1 million in 2011.

This article was prepared by Standard & Poor’s and is not intended to provide specific investment advice or recommendations for any individual.

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