January 1, 2013 Congress extended most of the Bush era tax cuts with few modifications. Included in the package was a provision making the estate and gift tax provisions permanent. The federal full lifetime exclusion amount for an individual is $5 million, plus an annual inflation adjustment after 2011. The current exclusion amount is $5,250,000.
So does this mean you don’t need an estate plan if you don’t have an estate worth over $5 million? Of course not! Avoiding death taxes is only one reason among many to have an estate plan.
With a good estate plan you can avoid probate. Even a modest estate with a gross value of $200,000 could cost as much as $14,000 in attorney and executor fees and take an average of six months or more to conclude.
With a good estate plan your minor children are provided for. Without a plan, your children’s funds may be locked up by the court until they reach age 18, at which point they’ll receive the entire amount.
With a good estate plan, your heirs will be chosen by you and not by the state. Sometimes the default distribution laid out in California law works just fine, but for many families it can lead to surprising and upsetting result.
An estate plan is a good way to take care of your family for the last time. If you need an estate plan, or have one that needs reviewed, the Estate Plan Pros team can help.