Estate Planning Strategies for 2018
Unfortunately, many people spend more time planning their vacation than they do deciding what will happen to their family, assets, and their estate when they pass away. We know that estate planning isn’t fun or glamorous, but without it, your family could be left struggling unnecessarily. Let’s discuss a few strategies to consider for your 2018 estate planning.
Estate Planning is for the Middle Class
If you think that estate planning is something that only the wealthy need, you may be in for a surprise. Today, even the middle-class need to plan for when something happens to the breadwinner. Even if you’re only leaving behind a few assets like real estate, family jewelry, or other sentimental property, if you don’t officially designate who you want to receive the property when you pass away, there is simply no way to be sure that your wishes will be followed.
Designation of Heirs
A main component of estate planning is designating the heirs for your assets. In states like Texas, community property laws may affect whether your surviving spouse inherits the bulk of your property. However, there are ways to establish specific heirs for certain assets – whether it’s a cabin that has been in your family for years or a stock portfolio.
Remember that without an estate plan such as a will or living trust, the courts get to decide who inherits your assets. If you pass away without a will, the process of settling your estate can take years and might get ugly.
What About Family-Owned Businesses?
Statistics show that only 30 percent of family businesses will survive one generation, and less than 15 percent of family businesses will last longer than two generations. The top causes for family business failures are:
- Poor management
- Improper training
- No business succession planning
In Texas, the most preventable issue facing every family owned business is succession planning. Who will replace the current owners upon their death? Succession planning will allow the business owners to determine what works best for him, his family and his business, should they pass away, become disabled, or retire.
Succession planning allows for the preservation of your business. It includes the transfer of control in a way that carries out your goals and objectives of sustainability. Problems associated with high taxes, poor management, and family discord may be controlled, or even eliminated, by making business succession planning part of your estate planning.
2018 Changes in Estate Tax Exemptions
There are some big changes to the federal estate tax this year. It’s important that you understand the new laws to determine if estate tax liability is an issue. Estate tax is essentially a way for the government to tax your property upon death, depending on how and to whom it is transferred. If your taxable estate is valued more than the amount set by Congress, certain taxes must be paid within nine months of death. Your estate value is figured to be the market value of your assets minus certain allowable expenses like mortgages, funeral expenses, and the cost to administer your estate.
There is an exemption for estates valued under a certain amount. But given the value of land or farm assets in Texas, this has the potential to impact many. There are, however, several estate planning tools available to help you and your heirs avoid estate tax liability even if your estate’s worth exceeds the exemption amount.
Remember, without a solid plan in place, there will be long-lasting impact on your family or loved ones. Even if you don’t leave behind a pricey home, investment accounts, or expensive art, you still want to make sure that your legacy is protected from the expense of court proceedings and government taxes. To learn more about estate planning in Texas, contact us today for your free consultation.