Estate planning is simply another form of financial planning. For those people who planned well enough to have accumulated an estate above the estate exemption amount, it is no less important to do estate planning to avoid estate taxes when your estate transfers to your children. If you have a net worth in excess of the federal estate tax exemption amount, you should contact a person experienced in estate planning so that you can become fully aware of the estate tax liability your children will have and also be fully aware of what the options are to minimize or eliminate those estate taxes. Since the most common method of avoiding estate taxes is to cumulate the federal exemption that every person has under federal estate tax laws, is is essential for a family that this planning be done by both spouses during their lifetimes. If one spouse dies and no planning has been done, one federal exemption amount will have already been wasted.
Nothing is so easy as putting off reasonable estate planning.
However for those who have an estate over the federal exemption amount, putting off the planning process runs a substantial risk. Once one spouse dies, the surviving spouse has far less flexibility in avoiding estate taxes. Back to Top Life Estate Reservations Advantages and Disadvantages If you transfer property to your children, reserving the right to use the property until you die, you are known as the life tenant and your children are known as remaindermen. If you do this and do not need to apply for medical assistance for a period of 36 months, the remainder interest in the residence will be preserved from the reach of the medical assistance laws. Transferring your residential real estate and reserving a life estate will eliminate the need for a probate proceeding upon the death of the life tenants as to that real estate.