Editors Note: This article was prepared by MetLife and contributed by Tyson Smith, Financial Advisor, MetLife Securities. MetLife, Inc. is a global provider of insurance, annuities, and employee benefit programs, serving 90 million customers. Through its subsidiaries and affiliates, MetLife holds leading market positions in the United States, Japan, Latin America, Asia, Europe, the Middle East, and Africa. ShaleStuff.com is pleased to feature contributed articles written by experts who are knowledgeable in various topics that affect the industry.
Many people think estate planning is necessary only for those with sizable assets. However, even small estates require smart planning to protect loved ones. Here are some important steps you can take now to ease your family’s emotional and financial burden in the event of you cannot do so yourself:
- You May Be Worth More Than You Think—Take an inventory of all your assets. This includes but is not limited to real estate holdings; bank accounts (i.e. savings, Certificates of Deposits, money markets); investment accounts; retirement assets (pensions, 401(k), IRAs, annuities); collectibles; jewelry; motor vehicles; life insurance policies; and other personal property. You may need to seek professional assistance to properly assess your estate, such as a real estate or collectibles appraiser.
- Where there’s a will—A will is a legal document designating the transfer of your property and assets after you die. If you die without a will, the court steps in and distributes your property according to the laws of your state, not your wishes. This can be quite traumatic to your family. Additionally, if you have no apparent heirs and die without a will, it’s even possible the state will claim your estate. Now, if you already have a will, you’re off to a great start. Just be sure to keep it updated as life events arise—i.e. getting married; having children; adopting; purchasing a home; or getting a divorce.
- Naming an executor and guardian—In your will, you name a person who will carry out or execute the instructions stated in said document. Of course, you would want someone you trust, and therefore, most people choose their spouse, an adult child, a relative, a friend or a trust company or attorney to fulfill this duty. Your executor will be charged with responsibilities like collecting your assets; paying creditors; paying taxes; distributing your asset as stated in the will; notifying your credit cards, utility provider, and the like of the death. And if you have minor children or those who cannot care for themselves you should also name a guardian. You’ll want them to have the best possible care in your absence. Making a will gives you the opportunity to select the person you believe can provide that. If you do not name a guardian to care for your children, a judge will appoint one, and it may not be someone you would have chosen.
- The Estate Tax—Even after your death your estate may be subject to costs such as estate & income taxes and probate fees. If you happen to own enough assets at your death such that you are subject to estate tax and you do not have an estate tax plan, your heirs may be feeling more than just a pinch. Even given the uncertainty of the current estate tax law, you should be speaking with qualified legal and tax counsel now to be sure to that you do have an effective tax strategy in place.
These are just a few tips for protecting estates. Consider taking these initiatives now, while they are fresh in your mind. Although smaller estates may have different concerns from larger ones, the key to successful estate preservation is preparation, not size!
About the Author: Tyson Smith, Financial Advisor, MetLife Securities, can be reached by phone 412-200-4672 or by email tsmith6@metlife.com.
To learn more about MetLife, visit https://www.metlife.com/individual/index.html.
Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this article is not intended to (and cannot) be used by anyone to avoid IRS penalties. This article supports the promotion and marketing of life insurance. You should seek advice based on your particular circumstances from an independent tax advisor. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (“Act”) impacts the federal gift, estate and generation skipping transfer tax (together referred to as “transfer tax”) through 2012. Among other changes, the Act temporarily establishes maximum exemption amounts of $5,000,000 per person for transfer tax purposes (which amount is adjusted for inflation in 2012 to $5,120,000), establishes a maximum transfer tax rate of 35% and provides for portability of the estate tax exemption between spouses. These changes, however, are only in effect through December 31, 2012. Unless Congress enacts new legislation, on January 1, 2013 the transfer tax laws will revert back to the laws (e.g. exemption amounts of $1,000,000 and generally 55% maximum tax rates) that were in effect in 2001. At this time, it is not clear what steps, if any, Congress will take to revise the transfer tax laws for years beyond 2012. Future changes in transfer tax exemption amounts and transfer tax rates may impact the appropriateness of any transfer tax planning strategy or product sale. Clients need to understand that tax law is always subject to interpretation and legislative change. MetLife and its affiliates do not provide tax advice and therefore clients must speak with their qualified legal and tax counsel regarding their current estate plan and what planning options are available and appropriate. The foregoing discussion is general in nature and not intended as specific advice. Neither MetLife nor its representatives are engaged in rendering tax, accounting or legal advice. A qualified professional should be consulted regarding the effect of such considerations on the matters covered in this publication.