If legislation eliminates the federal estate and gift tax, will the need for estate planning be elimated?

No! Estate planning isn't just about avoiding estate taxes; it is about getting your assets to the right people in the right way. It's possible that ten to twenty years from now, new legislation could incorporate an estate tax again. Even if no estate tax exists, there are some legal documents that may be needed:

• Durable Powers of Attorney, so somebody can make financial and medical decisions if you become incapacitated.
  
• A Living Will outlining your wishes concerning life-prolonging medical procedures.
  
• A Will specifying who gets what, and making sure assets are properly titled. No matter what your Will says, retirement accounts usually go to the beneficiaries named on those accounts.
  

Trusts set up for purely tax-motivated reasons would disappear. But Trusts would continue to be used in such areas as protecting assets from creditors, providing for a minor child, avoiding probate, imposing controls on spend-thrift heirs, and ensuring assets are left to those as desired such as children in a second marriage situation. Gifts would still be able to be used for a child's first home or starting a business.

Life insurance trusts may disappear, but life insurance will remain an estate-planning tool. Business partners would have life insurance on each other in case one partner dies to have monies to pay for his partner's share of the business.

Other areas that should be considered:

• Consider long-term health care if:
• You have significant assets and income
• You want to protect some of your assets and income
• You want to pay for your own care
• You want to stay independent of the support of others

• Uniform Transfers to Minors Act (UTMA) or a child's trust? As a general rule, the less valuable the property involved and the more mature (older) the child, the UTMA is the probable choice, because it is simpler and better from a tax point of view than a trust. If leaving more than $100,000 to a child, a child's trust is desirable.

Your estate plan may also need to be changed if any of the following pertain to you:

• Change in marital status
• Birth of a child
• Child becomes an adult
• Move to another state
• Significant change in financial status
• Significant change in tax laws
• Death of a beneficiary
• Add or change beneficiaries
• Death or incapacity of a named executor, trustee or guardian

This is a sketch of estate planning issues to be considered. In the future there will be articles from IFM with more specifics on some of these issues. If you have questions or interests in any particular area, please let us know. We are here to serve.