Who will make medical and financial decisions on my behalf when I am incapable of doing so?
Who will receive my personal items when I pass away? My car? My house?
More importantly, who will get my money?
Who will take care of my children?
Who will manage the assets I leave behind for my children if they are young when I pass away?
Will my loved ones be faced with a massive estate tax bill?
These are all important questions to consider when you are thinking about your estate plan. Often times, individuals are very concerned about the impact that estate or inheritance taxes will have on the assets they leave behind. Luckily, for those of us in Indiana and Ohio, both states have done away with estate and inheritance taxes. However, it is still important to understand the federal estate tax and how it could impact your estate.
At this time, the federal estate tax exemption is quite high. For the year 2015, every taxpayer has a lifetime exemption of $5,430,000, while married couples have a $10,860,000 lifetime exemption (amounts are adjusted each year for inflation). This means that, by and large, the federal estate tax will impact only those individuals who die leaving behind large estates. Here is an interesting summary of the recent history of U.S. federal estate tax exemptions and rates.
While the thought of tax planning can be scary, it is helpful to note that under current law, most individuals will not leave behind a hefty estate tax burden. Don't let concerns and confusion about how estate taxes will apply to you deter you from moving forward with your estate plan!