I recently read an article here about why it is important for women to have an estate plan. This comes on the heels of an increase in the estate tax exemption from $3.5 million in 2009 to $5.0 million for 2011 and 2012. This means that that when someone passes they generally will not be subject to estate tax unless the amount of his or her investments, property, cash, real estate, etc., (your net assets) is greater than $5 million.
Many wills are drafted to state that the amount of your spouse’s assets that will go to your kids in an amount equal to the federal exemption amount ($5.0 million) and the remainder of the assets will go to you. This is fine when the exemption amount was $3.5 million, but it may not work so well at $ 5 million.
For example, say all of the assets accumulated by Husband and Wife are in Husband’s name. Further, say that the assets are worth approximately $5 million. Husband passes away and his will dictates that the federal estate exemption amount goes to your children, the remainder to you. Let’s do the math.
Total Assets : $5 Million
Amount to Kids: $5 Million
Amount to you: Zero.
People may think that they don’t have to worry about estate planning because they do not have asset any where near $5 million. However, you may be wrong. Estate planning is not only about estate taxes. You should all consider what should happens to your assets (including your children) in the event of your demise.
The bottom line of this story is that you all should take time to review your estate plan now, no matter how much or how little you have,
Contact an Orange County divorce lawyer for more information.
Source: Why Women Need an Estate Plan