Napier & Company, LCC

1. Make a complete and accurate inventory of all assets and their values.
2. Determine the form of ownership of each asset; understand its effect on transfer of property at death.
3. Verify beneficiary designations on life insurance policies and on retirement accounts.
4. Estimate the size of the estate to determine whether estate tax planning is needed. This probably will require discussion with an attorney.
5. Decide whether certain family members or assets need special protection (minor children, adults with special needs, family business).
6. Select beneficiaries and determine what provisions should be made for each.
7. Determine how financial and health care decisions will be made in the case of illness or disability.
8. Determine how health care will be funded.
9. Estimate the cost of alternative estate planning methods that will meet the goals.
10. Select and implement the estate plan.
11. Laws and family circumstances change. Review plan regularly.

Annual Gift Tax Exclusion

In 2006 a taxpayer can give $12,000 per person in a calendar year without paying federal estate and gift tax. The gift can be given to any number of recipients in that year. If the gift exceeds $12,000, only the excess is a taxable gift. The annual exclusion is indexed for inflation and will change again when cost of living adjustments reach the next $1,000 multiple.

Estate Tax Limits for 2006 through 2009

A Form 706 (estate tax return) must be filed if the decedent’s gross estate at death plus lifetime gifts exceed the $2.0 million exemption amount (for 2006). This gross estate includes all property owned by the decedent at the time of death, i.e., cash, investments, personal property, life insurance proceeds, real estate, business interests and vehicles. This also includes assets going through probate as well as assets inherited directly by joint owners or beneficiaries. The gross estate also includes partial interests, intangible property and property placed in a revocable trust or other interests transferred by a decedent.

The tax is imposed on the person transferring property rather than on the recipients. An exemption is allowed before the gift and estate tax is imposed. The estate tax exemption for 2005 through 2009 is as follows:

2006                                2,000,000

2007                                2,000,000

2008                                2,000,000

2009                                3.500,000