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Working around uncertain tax changes to set up an estate plan

Legal experts say some people are so paralyzed by unknown changes in gift and estate tax laws that they are placing estate planning on hold. Many California experts believe not drafting estate planning documents, because estate tax exemptions and rates are uncertain, is a mistake.

Wills and trusts can be designed to be flexible enough to accommodate tax law shifts, according to estate planning specialists. Creating a foundation with a basic estate plan is the initial goal. The plan can always be modified later to fit changing life and lawmaker events.

There are still items within an estate plan that remain relatively constant, whether tax rate zoom or exemptions fall. Choices for the guardian of your children, an executor, a trustee or a charitable organization can be made regardless of tax laws. Medical directives and powers of attorney can be established without tax interference.

Every estate plan requires an accounting of estate assets and debts, which should be compiled and updated annually to prevent later confusion among estate managers, heirs and courts. It is important to share information about the location and content of the list with an executor.

Legal experts also urge clients to create estate cash plans. Attorneys, estate management fees, survivors and tax bills all require cash payments. Estate plans can include a cash account or instructions to create liquidity.

Many people automatically choose a spouse or adult child to be a trustee or executor. Estate planners recommend making this decision carefully. Trust and the ability to do the job well are qualities not every immediate family member possesses.

Informing family members about your estate plan gives them an idea what to expect, although most estate advisors discourage passing around copies of wills or over-sharing details.

Estate plans are never finished. They always need revising throughout the duration of a person's life. Relationships, assets and tax laws change. That's why estate plan updates need to be updated regularly. Advisors suggest reviews every two to three years or sooner, if life-changing events occur.

Source:, "10 Basic Rules for Every Estate Plan," Bob Carlson, Aug. 20, 2012

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