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Are wills and trusts only for the wealthy?

According to the Internal Revenue Service’s website, an estate tax return on IRS Form 706 may not be required for estates whose gross assets (including taxable gifts) are under $5,340,000 in 2014. 

Readers may have questions regarding that estate tax exemption. For example, is estate planning only recommended for those individuals who estimate that their estate value will exceed $5 million dollars? The answer: definitely not. Estate planning can be a good idea for anyone over the age of 18.

As a preliminary matter, memorializing one’s intentions using the tools and resources of estate law can help avoid disputes among beneficiaries. Even small estates may contain many cherished personal items or heirlooms, and an individual can help minimize confusion -- or fights -- by specifically leaving instructions in a will or trust.

In addition, estate planning is a smart option for parents. Working parents often have an employer-sponsored retirement plan, such as a 401(k). An individual may also have additional retirement savings, such as an IRA. The designated beneficiary on those accounts may be the other spouse, possibly in addition to minor children. Although probate or other court involvement is not required for the spousal beneficiary, the same may not be true for minor children who are IRA or 401(k) beneficiaries. For them, a court may require a minor’s guardianship to be established until they reach age 18.

The solution can be a testamentary trust. In fact, this type of trust can even be created through another trust, such as a revocable trust. Although it may not offer tax savings during the grantor’s lifetime, a revocable living trust offers its creator complete control and flexibility, even to the point of removing all of the trust assets.

For more information, check out our firm’s Miami estate planning page. 

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