You’ve spent a lifetime building your wealth, but who will help grow, protect and transfer those assets to others when you’re gone? The Private Client Group at National City offers a wide range of trust and estate services to meet its clients’ individual needs — and has been counseling clients on estate planning for more than 160 years.
Whether you own a business or are just beginning your career, estate planning is a financial goal that applies to everyone. In the past, women have traditionally left financial planning to their spouses, however, today 83 percent of investment decisions are made or influenced by women. Not only are women outliving their male counterparts, but more than 50 percent of the affluent households are headed by women. For these reasons, it’s important that women participate in the planning process.
“You don’t have to be affluent to need an estate plan. Everyone should be concerned about the basics — planning for incapacity, naming a power of attorney, and creating wills and trusts,” says Mark W. Buxton, director of financial planning for the Private Client Group.
The Private Client Group can help both women and men stay informed of the changes to estate tax laws. For example, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) made significant changes to Federal estate, gift and generation-skipping transfer taxes.
“The concept of the act eliminates estate taxes by 2010, but it doesn’t truly eliminate them,” says Buxton. “It ramps up an individual’s tax exemption in steps, starting at $675,000 in 2001 to where it is today, at $2 million.”
Buxton says there remains a great degree of uncertainty and confusion with EGTRRA — and it’s easy to see why. That $2 million exemption increases to $3.5 million in 2009, and, in 2010, the estate tax disappears completely. But in 2011, the estate tax returns with just a $1 million exemption due to the act’s sunset provision.
EGTRRA can create complications for those with existing estate plans in place. One example is a credit shelter trust, which is typically used by married couples whose estate exceeds the amount exempt from estate tax.
“Frequently, the money left to the credit shelter trust is funded with the exemption amount, which is often left to children or individuals other than the spouse,” Buxton explains. “If you were to set up a trust in 2001 and you were worth $5 million, then $675,000 would have gone into that trust for the children and $4,325,000 would go to the spouse. If you were to die today and your estate was still worth $5 million, you can have $2 million go to the children and $3 million for the spouse. But that may or may not be what you intended.”
That’s why Buxton advocates reviewing your estate plan annually. “Women who may have estate documents already in place, but haven’t reviewed their plan in the last five to 10 years could experience unintended consequences if they were to die at this time,” Buxton says. “People often spend a lot of time setting up what they believe is a good estate plan, but due to neglect, their wishes may not get carried out the way they wanted.”
For more information on how the Private Client Group at National City can help you grow, preserve and transfer your wealth, call (800) 628-8151.