Legislative changes that raised the threshold for federal estate taxes may have led some of those day trading for a living to think they may not need a proper estate plan. However, Investing Daily says that could be a mistake.
According to the changes passed last year, estates worth less than $5 million are exempt from paying federal estate taxes. However, even those traders with estates worth less than that can still benefit from a living trust and complete estate plan.
For example, a typical situation would leave all of a person's assets to their spouse, and they would pass onto their children following the spouse's death. However, fewer families in the current day and age are traditional nuclear families, and determining how to deal with multiple spouses and children can be a complicated process.
Traders can also use a living trust to lay out what should happen if a potential is too young to manage their portion of the estate, or plan for potential hurdles which may arise.
It's also necessary to determine how probate courts will affect an estate. The source says while some states have well-managed probate court systems that are able to quickly resolve cases with little financial drain, others do not.
Traders are encouraged to discuss their situation with an estate planner and determine the best course of action for their particular situation, so their estate can be managed as efficiently as possible.
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