Good Estate Planning: What It Can Do for You (Part 2)
In our previous post, we looked at a couple of things that good estate planning can do for you and your loved ones. There are so many of them, we have to provide a second installment.
Adult Guardianship
As elder law attorneys, we are acutely aware of the challenges that people face when they reach advanced ages. Without question, Alzheimer’s disease is at the top of the list. It strikes over 30 percent of people that are 85 years of age and older. There are also other causes of cognitive impairment.
In addition to cognitive difficulties, there are those that cannot handle their own day-to-day affairs for other health related reasons. If you don’t take steps in advance to prepare for this eventuality, interested parties could petition the court to appoint a guardian to act on your behalf.
This is a necessary safeguard, but there are some potential negatives to say the least. For one, the person that is ultimately empowered may not be the individual you would have chosen when you were fully capable.
Secondly, members of your family may disagree with regard to the proper course of action. This can cause hard feelings during a time when people should be pulling together to provide support for one another.
Good estate planning can nip these potential problems in the bud. Your estate plan should include an incapacity planning component, and it starts with advance directives for health care.
One of these directives is a living will. With this type of will, you state your choices with regard to the use of feeding tubes, artificial hydration, resuscitation, mechanical respiration, etc. Plus, you can add your organ and tissue donation and comfort care medication choices.
The other directive that should be included is a durable power of attorney for health care. Medical scenarios that are not related to life-support utilization can arise that require decision-making. The agent that you name will be empowered to make them on your behalf if it becomes necessary.
Estate Tax Efficiency
Individuals that have been very successful financially can potentially be exposed to the federal estate tax. It can severely damage your legacy, because it carries a 40 percent maximum rate. Fortunately, most people do not have to be concerned about this tax because of the exclusion.
In 2022 the exclusion stands at $12.06 million. The portion of an estate that exceeds this amount is potentially subject to taxation.
There is no estate tax on transfers between spouses because there is an unlimited marital deduction. However, this deduction only applies to American citizens.
In addition to the federal estate tax, there are 12 states that have state-level estate taxes to contend with as well. Fortunately for us, there is no state-level estate tax in Oklahoma, but there is another consideration.
If you own property in one of the states with an estate tax, it would apply to your estate. Of course, there are exclusions on the state level as well, but they are much lower. For instance, the exclusion in Oregon is just $1 million, and Massachusetts also has a $1 million exclusion.
A lot of people in Oklahoma are in possession of large tracts of land that are very valuable. Good estate planning can mitigate the damage if you are exposed to estate taxes.
We Are Here to Help!
Today is the day for action if you are going through life without a properly constructed plan. You can schedule a consultation or Oklahoma City estate planning office if you call us at 405-843-6100, and you can use our contact form to send us a message.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.
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