LA Probate Law: Myths and Reality of Estate Planning
In this article the objective is to break through some of the myths and realities that come into play with estate planning. By bringing light and truth to some of the myths surrounding estate planning they can better understand the importance of keeping all of your estate plans in order. Taking away these misconceptions eliminates all fear and confusion when considering estate planning. In 2001 Congress passed the economic growth and tax reconciliation relief act. Estate planning is a complex thing in itself but when this (the EGTRRA) was established it just added to the confusion that already surrounds the system. According to a wall street journal article that was dated May 11, 2005, “…current estate tax law puts estate-tax planners in an impossible situation…” because this creates so much uncertainty there have been many damaging estate planning myths that have surfaced. These potentially damaging myths get in the way of prudent estate planning. Understanding all of the intricate levels of LA Probate Law is the only way for people to feel secure about moving forward.
Myth. Should you avoid using Life Insurance trusts with all of the tax law in certainty?
The most significant tool available to you in regards to use insurance related estate planning is the irrevocable Life Insurance Trust.(ILIT) There are two sides of this insurance that makes it so significant. The revocable nature provides an estate tax savings while the insurance provides a cost effective way to pay estate taxes says LA Probate Law. The plus side of an irrevocable Life Insurance Trust is that the proceeds do not get included in to the person’s estate. The fact that it is kept out of the estate makes it so that it does not increase the tax burden. This particular trust is a double winner as there are not only the death proceeds outside of the estate but these can also be used to meet the estate’s liquidity needs. To make sure that the proceeds state out of the estate you have to meet two requirements. They are that the insured cannot have any incidents of ownership within his policy and the trust must be a revocable. It just simply is not true or a practice for people to avoid using these.
Myth. Does the estate tax reform signal in and of charitable giving?
There are many reasons why people give to charities. It is very emotionally rewarding and it also gives you some income tax breaks. There are certain strategies used with charitable giving that helps to reduce or freeze the value of your state. Many people believe that and estate-tax reform would bring down the amount of charitable giving. The thought behind this is that people will be less inclined to make charitable donations if there are fewer estates being subjected to in estate-tax period. Statistics show otherwise. Within this time frame the state tax exemption amount more than double what it was. If the Mets were true that last people would give charitably been how is it that within this same time period these numbers rose by nearly $90,000,000,000. This myth is obviously very untrue. There’s been a steady rise where charitable giving is concerned and this is due mostly to the fact that charitable giving has nothing to do with, for the most part, what people can get back for doing it. The majority of alternative giving is not done by huge corporations but by individual people and parties. These individuals make up 77% of all the charitable gifts and there’s no reason to believe that this positive trend is going to turn around any time soon. Ask any LA Probate Law attorney and they will probably agree that a simple estate tax deduction is not why most people choose to give to charity.
Myth. Do revocable living trusts reduce taxes?
If you own a home or other property or you have other investments besides these you will need of revocable living trust. Finding and knowledgeable LA Probate Law lawyer can help you to understand more about this. This type of trust is completely as separate legal entity than the others. It is your choice whether you will transfer some or all of your property to this trust. Throughout your life you will control the trust; and anytime that you choose you can change the terms or terminate it and take all of the assets back. Upon your death the trust then becomes irrevocable and can continue for many years. People like the idea of living trusts because there able to maintain control over their assets while continuing with their lives and achieving their goals. They like being able to distribute their assets to heirs in whatever manner and in whatever time they see fit. With this they can avoid probate and it also serves as a substitute will. It is common for people to think that this type of trust will save taxes. This is not true of all the benefits that a revocable trust may provide tax savings does not happen to be one of those.
Myth. Estate planning is dead
The greatest myth of them all is that there is no purpose left in estate planning. Many reasons still exist for people to continue with their estate plans, such as asset protection, privacy, equalization of inheritance, special needs dependents and multi-generational planning. One of the most important estate planning goals is Life Insurance. Seeking a legal advice of a lawyer who has knowledge of LA Probate Law can help you to get your estate plan in order. You owe this to yourself as well as your loved ones. If you have never made a will or you have one that is not been updated in quite some time this to be a priority for you. This can be a matter of survival, after you are gone, for your loved ones.
LA Probate Law: Myths and Reality of Estate Planning