Don’t wait until you are a senior citizen to make your estate plan.
There are many reasons why planning ahead for your estate is important, such as preparing for end-of-life expenses as well as the rules surrounding eligibility for Medicaid to pay for nursing home care. Also lurking in the background is the important issue of taxes, according to the Wills, Trusts & Estates Prof Blog in “Federal Estate and Gift Taxes Are a Mortality Risk.”
Both federal and state tax authorities are aware that if a person knows he or she will pass away soon, there is a strong incentive to rearrange financial affairs to get around estate taxes. People may be tempted to give their money away on their deathbeds, in order to shrink their estates below the estate tax exemption limit.
For that reason, tax codes include provisions that gifts made within specified time periods before a person passes away, are still considered part of the estate. Other tax code provisions similarly anticipate things a dying person might be tempted to do to rearrange their finances.
Because of these issues, it is important to plan ahead for the estate tax.
An estate planning attorney can advise you in creating an estate plan that meets your unique circumstances and allows you to plan ahead to help protect your loved ones.