Whether Congress acts in this lame-duck session to allow taxpayers to protect more than $1 million from estate tax in 2011 is beyond our control. Despite this uncertainty, certain fundamental steps are important for all of us, regardless of the exemption amount. These steps include the following:
1. Ensuring you have in place the necessary estate documents, which will always include a Will, Power of Attorney, Medical Directive, and in many cases, a Revocable Trust (collectively "Estate Documents").
2. Preparing Trusts for children to ensure the inherited assets remain in the bloodline rather than with former son-in-laws, former daughter-in-laws, or other predators.
3. Regarding the Revocable Trust, creating and funding the Trust to avoid probate. In addition, creating the Revocable Trust with the necessary credit and marital trusts to take advantage of the exemption amount, whether it is $1 million, $3.5 million or $5 million.
4. Scrutinizing the beneficiaries of your life insurance, IRA’s, 401(k)’s, annuities, etc., to ensure these beneficiary designations are consistent with the intent of your Estate Documents.
5. Scrutinizing the title of your jointly owned assets, such as real estate, brokerage accounts, bank accounts, etc., to ensure these assets are titled consistent with the intent of your Estate Documents.
6. In addition to the Estate Documents, considering whether additional planning is necessary to avoid estate tax, such as an Irrevocable Trust for life insurance and other advanced planning tools.