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Learn How You May Avoid Probate, Save Legal Fees and Taxes, and More...

Planning your estate for the benefit of your family, other loved ones and your favorite charitable organization is a matter of good stewardship over the resources with which you have been entrusted. However, this is all too often a neglected subject among our population.

There are many reasons that people fail to properly plan, but it is important to know that if you do not make a plan, the state in which you live has one for you upon your death. This is known as "intestacy" (i.e., dying without a will), and each state has laws that will govern the administration and distribution of your assets if you have failed to properly plan your estate. Also, you are subject to laws that impose taxes on the privilege of passing assets at death (i.e., estate and inheritance taxes) which may apply depending on the value of your estate.

Proper planning can often eliminate or minimize such taxes and maximize amounts being passed to your loved ones and to the ministry of your choice.

Methods of Estate Planning

The best known method of planning one's estate is through the use of a Will. Simply stated, a Will is a legal document that directs the distribution of your assets at death. In more recent years, the revocable living trust has become a very popular method of accomplishing the objectives of a Will, but with the benefit of avoiding probate and providing for continuity of management of your assets as trustee for his/her own benefit retaining the right to revoke and amend the trust during his/her lifetime(s).

The trust document will provide for distribution after the person's death as well as designating a "successor trustee" to manage the trust assets at the death or incapacity of the initial trustee.

Estate Tax Planning

As mentioned before, the federal government imposes a tax on the "privilege" of transferring one's assets at death. This is called the federal estate tax. Many states also impose taxes on transfers at death (normally referred to as "inheritance taxes"). The federal estate tax is based on the fair market value of all of the assets you own as of your date of death. Federal law allows an "applicable exclusion amount" to pass tax-free, but amounts in excess of this may be subject to tax beginning at a rate of 43%. The following table shows how these "tax-free amounts" are being phased in over the next several years:

Year
Applicable
Exclusion Amount
2004 and 2005
$1,500,000
2006 through 2008
$2,000,000
2009
$3,500,000
2010
No Limit
2011
$1,000,000











In addition to the "tax-free" amount that is available to each person, the federal estate tax law contains provisions called the "marital deduction." The marital deduction allows an unlimited amount of assets to pass from one spouse to another at the death of the first spouse.

Depending on the value of the estate, it is important that proper estate tax planning is done while both spouses are living to insure that the maximum tax benefits are obtained. Often this is accomplished through what is commonly referred to as an "A-B" or "tax-planning" type trust.

The estate tax laws also provide for a full deduction for assets passing to qualified tax-exempt ministries upon your death. TBN is a tax-exempt organization and is qualified to receive such donations from a will or living trust. Again, careful planning is needed to utilize this giving method which can both minimize taxes and also provide for your favorite charitable organizations and ministries.

Other Planning Opportunities

In addition to the items discussed above, there are a number of other opportunities which may be appropriate to assist you in accomplishing your stewardship goals. Some of these include charitable remainder trusts, charitable gift annuities and life insurance trusts. These instruments can be structured to benefit the individual and his or her family as well as charitable organizations while producing highly beneficial tax consequences.

To learn more about these opportunities and others, please contact the Stewardship Department at TBN for further information.

If you don't plan your estate, the laws of the state in which you reside will decide how your assets will be distributed. If you make the small investment of planning your estate, those decisions will be yours.The information provided is not intended as legal advice. Please consult a competent estate planning attorney.