By: Susan M. Graham, Certified Elder Law Attorney, Senior Edge Legal, Boise, Idaho
The federal death tax free estate in 2013 is set at $5,000,000 or less. That means if you die as a single person owning less than $5 million, there is no death tax to pay to the IRS. Who does that impact? Not many. In the year 2000 when the federal death tax free estate was $675,000, there were just over 50,000 federal death tax returns filed (officially called a 706 death tax return). In the year 2011, when the death tax free estate was $5,000,000, there were approximately 1,500 federal death tax returns filed.
What does that mean for you? Forget about death taxes as a reason to plan.
Unless you have an estate in excess of $5 million it is not necessary to focus on tax avoidance as the motivator for planning your estate. Instead, focus on what is important to you personally. Most good plans include:
maintaining your personal independence for the rest of your life,
planning for the possibility of being unable to care for yourself (you have a 50-70% chance of needing care before you die), and
protecting the assets you have worked a lifetime to create so they are available for you and those you care about after you are gone.
If you have no plan in place, your state government has one for you. Most likely the state plan for you is way off the mark of what you would like.
What should you do? Contact your estate planning attorney to put a plan in place that covers you now, during the good days. More importantly, it is there should you be unable to care for yourself or when you die.