Law Office of Daniel Westerburg
Quail Creek, Arizona
Estate planning is designed to:
a) appoint representatives of the client and give instructions on the handling of the client's affairs in the event of the client's death or disability;
b) avoid probate of the client's assets; and
c) avoid taxation of the client's estate.
How much of a decedent's estate is exempt from federal estate taxes?
The amount of a decedent's estate exempt from federal estate taxes is adjusted for inflation each year. In 2017, the exemption is $5.49 million per person. In most instances, the unused portion of a married decedent's exemption can be used by his or her surviving spouse, resulting in an effective combined exemption of $10.98 million per married couple in 2016. The amount of the exemption is reduced to the extent that the decedent made non-exempt gifts during his or her lifetime in excess of the annual limit, currently set at $14,000 per recipient.
What about state estate taxes?
Neither Arizona nor Alaska imposes estate taxes. However, the estate of an Arizona or Alaska resident could still be subject to another state's estate taxes if he or she owned property in anther state which does impose such taxes. Generally speaking, the amount of the tax (if any) would depend on the size of the decedent's overall estate and the proportion the value of the decedent's property located in the taxing state, bears to that size.
What is probate?
Probate is a court-supervised proceeding in which a personal representative is appointed to administer the decedent's estate according to protocol established by state statues and court rules. In most instances, the associated expense and delay in estate distribution can be avoided with proper estate planning.
What are the typical estate planning documents?
Regardless of estate tax considerations, everyone should have a will in order to control how his or her estate is distributed. In the absence of a will, the decedent's estate (not otherwise properly earmarked) will be distributed according to the laws of intestate succession. Many single persons would also benefit from a simple revocable living trust -- an effective tool for avoiding probate. Married clients generally have reciprocal (mirror image) wills and many also have a marital trust which (among other things) is designed to avoid probate after the deaths of both spouses. Trusts can also be designed to protect assets from creditors of the beneficiary; provide for children from a prior marriage; protect a beneficiary from dissipating assets; provide for a minor or special needs beneficiary; and prevent estate assets from passing into the hands of an unintended third party in the event the surviving spouse remarries. Clients whose potential estates might exceed the threshold for federal estate taxes would likely benefit from complex trusts specifically designed to mitigate the effect of such taxes. (I do not prepare these types of trusts.) In addition to wills and trusts, most clients should have a durable general power of attorney and an advance health care directive, so that a family representative will be available to handle the client's business and medical affairs should he or she become incapacitated.
Can an existing estate plan be simplified?
Absolutely. Many people who had complex estate plans prepared in prior years when the federal estate tax threshold was much lower find that they now prefer a leaner approach in order to simplify estate administration for their family after their deaths. There is much to be said for estate planning documents that are easy to read, simple to understand, and cost-effective to implement.
What is the cost?
I prepare estate planning documents on a flat fee basis. The cost includes the initial consultation, document preparation, and supervision of the signing. My fee schedule is set out elsewhere on this site.