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Trends in Estate Planning

By: Heather K. L. Conahan, Partner, Loden & Conahan, LLLC

737 Bishop St.,
Suite 2990
(808) 524-8099




It is an unsure world out there, so why worry about estate planning? The current “financial crisis” is challenging us on how to plan for retirement, disability and death because our wealth is fluctuating widely from day to day. To add to the confusion, the estate tax law is set to change. The big questions are how and when.

No one is immune from the current financial crisis — from blue collar workers whose corporate-sponsored retirement programs have plummeted 30+ percent in value in the last year, to beneficiaries of a wealthy estate who face a large estate tax bill, but lack buyers for the estate’s real estate-heavy holdings. 

So although estate planning might seem like a low priority, back-burner issue…it shouldn’t be. Now, more than ever, you need to re-visit your estate plan and make sure it fits your current situation.

The current estate tax law, enacted in 2001, is simple. If you die in 2009, the first $3.5 million of your holdings is exempt from estate tax. But if you die in 2010, there is absolutely no estate tax, no matter what your net worth. If you are not inclined to die in 2010, then you are in trouble because on January 1, 2011 the estate tax roars back to life, and the credit is reduced from $3.5 million to $1 million.

Experts agree that Congress will act before year’s end, or early 2010, and hope the exemption will be frozen at $3.5 million. But the fight is politically charged on what amounts to a tax on the wealthy.

With many people unable to pay their mortgage,  paying an estate planning attorney to draft a Will or Trust seems remote – especially to dispose of assets likely worth much less now.

But in reality, now is the time to plan. If you already have estate planning documents, now is the time to review them. If your estate plan assumed a higher net worth, some of  your beneficiaries may get a disproportionately higher (or lower) inheritance than you intended. Having no Will or a Trust can be worse. It is possible that your heirs will be fighting (and spending precious dollars) over a diminished estate. So investing a little time and money into this effort today could save money and relationships in the future.

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