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Nobody lives forever. This is why it is important that people in Florida have a proper estate plan in place just in case something unexpected occurs. When a person dies without carefully crafting an estate plan, his or her heirs may be subject to a variety of unnecessary costs. Hence, it is a good idea to periodically undergo an estate planning checkup in order to ensure everything is in place for proper estate administration at the appropriate time.
One reason for estate planning may be to avoid probate, which is a litigation process designed to verify that the legal estate planning documents are authentic and valid. Probate is not necessary if an estate plan is carefully crafted. One effective tool is to set up a trust and put all assets not needed for retirement into the trust. Avoiding probate may save heirs significant sums of money as some estimates say it can cost up to 6 percent of the gross estate.
Another reason for an estate planning checkup is to help heirs avoid paying a death tax. Beginning in 2013, the estate tax exclusion is set to return to the 2002 level of $1 million. This means any assets over $1 million will be subject to a federal estate tax. For example, if a person who dies has assets worth $1.5 million, their heirs will be able to receive the first $1 million of assets without being taxed at the federal level. However, the remaining $500,000 will be hit with a 43 percent tax rate.
It is important to choose the correct estate planning financial vehicles and tools in order to avoid probate, as well as the death tax. This may require a financial planner as well as an estate planning attorney. Drafting many of the documents involved in optimum financial and estate planning tricks can be complicated as well. In some cases, consulting legal professionals in Florida may be necessary in order to ensure the estate plan considers all important financial issues as well as ensuring all documents are drafted effectively. It can also save you and your heirs more money in the long run.