Federal law now permits each individual to leave up to $1.5 million, tax-free, to his or her heirs, in addition to tax-free bequests to a spouse and to charity. That $1.5 million allowance is scheduled to increase to $2 million in 2006 and Congress might even repeal the federal estate tax altogether.
Thus, you may have little or no concern about estate tax. If you think your estate won’t be taxed, you might neglect estate planning, which would be a mistake. Beyond taxes, you should be thinking of the most efficient ways to pass your assets to your heirs.
Unfortunately, about half of all Americans die without a will, according to a publication from the U.S. General Services Administration. Without a will to indicate your wishes, a court distributes your property according to the laws of your state. Those laws probably won’t result in the exact disposition of your assets that you had in mind.
Beyond a will, your estate planning also might require trusts, powers of attorney, and advance directives for medical treatment.