Essay About Gift Planning And Probate Process

Estate Tax
Estate and gift planning involves many different rules and regulations that every United States citizen will eventually have to deal with. Any family can take a huge financial blow if they are not prepared with how to use gift and estate planning to their advantage. There are many different rules that apply to many different situations concerning gift and estate, but here are five of the most important items to remember in the upcoming year. The five tips are use the gift exclusion to its fullest benefit, avoid the probate process, make sure you know what you’re doing when using the unlimited marital deduction, understand the credit amount you are given, and finally be timely.        The first item I feel is very important to understand is to always keep in mind how much you are allowed to gift without being taxed. Over the last few years, and still in 2016, the annual exclusion per donee is $14,000. Gifts are very popular for a lot of people so it is smart to be able to use this exclusion to the fullest in order to give as much as possible without being taxed. Also, for married couples, it is possible to double the annual exclusion, to $28,000 per donee, by using a spilt gift election. This spilt gift election does have a few regulations that must be followed such as it requires a gift tax return be filled (Form 709) and that it must be elected for all gifts made by both spouses for that year. The next important estate planning item I recommend is to avoid the probate process. The probate process is a legal proceeding that serves to prove the validity of an existing will, supervise the orderly distribution of a decedent’s assets to heirs, and protect creditors by insuring that valid debts of the estate are paid and to change title of assets not otherwise retitled from the decedent to the living. It is a proceeding that definitely needs to exist, but it is very easy to avoid with proper and timely estate planning. The reasons to avoid the probate process is because it takes usually 6-24 months, it has monetary expenses that could easily be avoided, and it causes a loss of privacy to the family dealing with it.