The new $5 million estate tax exemption, which was signed into law in December of 2010, has implications for any individual embarking on estate planning, according to a SmartMoney report. Many may feel that their estates wouldn't owe taxes if they passed between now and 2013, when that may not, in fact, be the case.
When beginning estate tax planning, one should take some basic organizational steps, including designating beneficiaries for all accounts, annuities, tax-favored retirement accounts, brokerage firm and bank accounts and company benefit plans. Life insurance policies, which are often used in estate plans to repay debt and income, should have the proper beneficiaries, as well. Moreover, one should change any beneficiaries that are blatantly outdated, the news outlet reports.
Without altering beneficiary designations, many have ended up in regrettable, and avoidable circumstances, including having ex-spouses collect from one's investment and savings plans, including life insurance coverage, even though their interest has been waived under a divorce agreement, as SmartMoney reports.
When reviewing accounts, annuities and other plans, estate planners should carefully review current beneficiaries and fill out necessary forms, such as payable on death forms or beneficiary change forms to make sure money goes where it should. Taking this step also helps avoid probate, according to the news source.
Those who are married and have joint accounts with their spouses should know that their surviving spouse automatically takes over upon the death
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