Often, clients go the extra mile when it comes to effective and thorough estate planning. Always, in the back of their mind, they’re thinking a step ahead so that their family isn’t overwhelmed with legalities after they pass away.
Through no fault of their own, however, their best intentions can sometimes fall short. This is where post-mortem planning can fill the gap. Planning after death provides a window for some changes to be made that would minimize an estate’s tax burden without compromising the deceased’s wishes for his beneficiaries.
Estate Administration Moves at a Slow Pace
Remember, estate administration – specifically the timeframes involved – can take a year or longer. There are some decisions that simply can’t wait until the legalities are hashed out. For all practical purposes, post-mortem planning addresses and attempts to interpret, when necessary and within legal confines, the intent of your wishes prior to it moving through the legal channels. This isn’t necessary for every estate; however, this bit of flexibility can mean an exceptional quality of life improvement for those who could benefit from the assets, whether it’s due to a medical or financial crisis.
There are a lot of factors that go into simply deciding if a post-mortem plan is applicable for any given estate (and don’t assume your estate is too small). The assets have a high precedence as do which documents are included in the plan. Laws change, so what might have been applicable five years ago may no longer be the case (another reason why it’s crucial to commit to estate planning check-ups with your lawyer). One example: This year, 2013, the estate tax rate is 40 percent and the fiduciary income tax rate for the highest bracket is 39.6 percent – and with the new year on our heels, you can be sure those figures will change based on a number of factors.
IRS
Because this is most often used for tax planning purposes, there are several IRS forms that will typically be required. Your estate planning lawyer can provide guidance on what those forms are and odds are, you’ll be surprised at how big a role even the smallest details play. For instance, by updating the basis of assets that you have earmarked for charitable entities, you’re covering the bases so that your estate won’t be hit with income taxes on those earnings. Don’t forget to define a year end date for the estate; again, it comes down to deferring income taxes of the estate.
Post mortem estate planning, while may not as mainstream as some of the other legal documents, shouldn’t be underestimated. As mentioned, the laws that guide estate planning lawyers change often and as a result, many are surprised that the revisions made to their wills, trusts and estate plans might no longer be relevant – even if those changes were made as recently as a year ago.
Post-Mortem Planning in MA – Preventing Problems
Your lawyer may never need to use it, but if the need arises and your estate plan lacks this directive, it can open the proverbial Pandora’s Box for your loved ones. Further, it’s impossible to cover the many intricacies in the scope of this column; the importance of working with a qualified law firm can’t be stressed enough. With so many uncertainties in our day to day lives, anything we can do to balance it out can only be advantageous not only to us, but our family as a whole.
Daniel DeBruyckere
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