Why Every American Needs a Will

While the nation is still debating health care reform, Americans have a bigger problem. Seventy-eight percent of Americans own a home and fifty-five percent of Americans have minor children living at home, yet less than half of the country has even made a will, let alone the other documents that make up a full estate plan. Some of us may need long term health care and some of us may not, but the only two certainties in life are death and taxes. While we at Wild Felice & Pardo are unable to help you live forever, we are very good at limiting the amount of taxes your family will have to pay after you are gone.

Did you know that the 2011 estate tax threshold can be as low as $1 million and estate taxes can be as high as 55%? $1 million seems like a lot of money, but when you consider that the amount of life insurance you have is added to your estate immediately upon death, $1 million can quickly sneak up on you. You work all your life and earn a wage. The government taxes that wage somewhere between 20 and 35 percent. Then, after you’re gone, the government takes another 45 to 55 percent of what you left behind. Nearly 80 percent of what you earn over your lifetime will go straight to taxes unless you take the time to sit down with an attorney and create your estate plan.

There are five components to a basic estate plan:

Shall: A legal statement in which a person, the testator, appoints one or more persons to administer his or her estate and provides for the transfer of his or her property upon death.

Living will: A written document stating a person’s wishes regarding life support or other medical treatment in certain circumstances, usually when death is imminent

Proxy: A written authorization to an agent to perform certain acts on behalf of his principal. This authority can be granted both general and limited.

Surrogate for health care: An adult appointed to make health care decisions for you when you are no longer able to make those decisions for yourself.

HIPAA designation: A written document that gives certain designated persons access to your medical records.

In addition, there are also several trusts and other products for further control and reduction of inheritance taxes. If you have a partner or child, own a home, or want to leave a legacy of any kind, you should talk to an attorney to get your will and other probate documents in order. It is critical that you stop procrastinating. None of us can control how much time we have left, but we can control how loved ones are cared for when that time comes.