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For
and About Members & Donors
Review your will
Many of us will be visiting our lawyers this year to be
sure that our existing wills still express our intent in light of The
Economic Growth and Tax Relief Reconciliation Act of 2001. For example, “formula clauses” leaving
“the maximum amount exempt from federal estate taxes” in trusts for children
should be rewritten, since, as the exemption amount increases annually,
these wills will leave more and more to children, and less and less to the
surviving spouse.
While at your lawyer’s office, here are a just a few of
the other will provisions you might want to check:
Distribution plan
– You might want to reconsider an equal distribution to your children
if, since your last will was written, one has become a multi-millionaire
entrepreneur, or one has developed special needs. Don’t forget that property passing to
heirs outside of the will, for example as co-owners of jointly held
property or beneficiaries of life insurance policies or retirement plans,
will affect your “equal distribution” plan.
Guardian for
minor children – Maybe your children aren’t minors anymore. Even if they are, maybe your college
buddy named as their guardian has moved out of state, or doesn’t look like
such a good choice anymore.
Payment of estate
taxes – In Pennsylvania,
if your will says nothing, estate taxes on property passing through the
will are paid from the “residue,” i.e., the amount left over after specific
bequests. Beneficiaries receiving
property outside of the will are responsible for estate taxes on the
property they inherit. If this isn’t
what you want, you need to say so in your will.
Bequests to
charity –An additional $325,000 is exempt from federal estate tax this
year, as the exemption equivalent increases from $675,000 to
$1 million. This means an
estate tax savings of $162,500 for those subject to the maximum 50%
rate. Why not do something
worthwhile for your favorite charities with even a portion of this savings,
thereby further reducing taxes on your estate and generating an immediate
income tax deduction? Even if your
estate isn’t subject to federal estate tax, review charitable provisions in
your will to be sure that they reflect your current philanthropic
interests.
Note that if you have no will Pennsylvania
laws make all of the above decisions for you! You may also be missing out on
significant tax savings. 2002 might be
a good year to finally get that will in place!
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