What happens if you DON'T plan your estate?
Say you procrastinate until the relatively young age of 47. You're in perfect health so you keep telling yourself "47 is the new 37...I have plenty of time."
Then tragedy hits. Whether it was a car accident or a sudden aneurism, the result is the same. Your family is left without you.
On top of their grief, your family also must cope with the mess of the unplanned estate you left behind. Assuming your business and other assets (or your "gross estate") are worth more than US$2,000,000, your family will be stuck with a considerable tax burden. In fact, your family could have to hand over 80% of your total estate just to pay income and estate taxes. That's quite a chunk.
Remember, the IRS considers your entire gross estate to include "cash and securities, real estate, insurance, trusts, annuities, business interests and other assets,". As you can see, there are few exempt assets that can be subtracted. But for the most part, your estate includes nearly every asset you own.
And if US$2,000,000 was not a low enough threshold for estate taxation already, consider that the IRS is dropping the taxable limit back down to US$1,000,000 in 2011. That's only four years away. As Forbes recently wrote "You don't have to be fantastically rich to concern yourself with estate planning issues."
So the best way to plan for your estate is to simply prepare now, so you can move on with the rest of your life.
And if you're already planning your estate, consider an offshore solution. By taking your estate offshore, the assets you leave to your heirs will enjoy the same protection as other offshore assets. In other words, your estate assets will enjoy greater protection from creditors and lawsuits and remain as confidential as possible. Plus, an offshore planning solution will help you pass your assets onto your heirs with as little hassle as possible when the time comes.
Here are a few offshore ideas to consider...
- Trusts: If you choose a trust-friendly offshore jurisdiction, a simple trust can significantly reduce your estate taxes for your spouse. Some trusts can also allow maximum use of gift tax exemptions through something called "planned giving." You can also set up your trust to provide your spouse with an income after you're gone.
- Family Foundation: This unique offshore solution allows you to manage your estate for the benefit of children, parents, grandparents, or other relatives. In time, the assets you safeguard in your family foundation, will be managed by your heirs. This can go on for generations.
- Variable Annuity: You can set up an offshore annuity that's completely separate from your ordinary estate. Upon your death your beneficiaries can immediately access the funds in your annuity, without having to wait for a certificate of distribution.
- Life Insurance: An offshore life insurance policy is specifically designed for estate planners who want their heirs to have the least fuss possible after they're gone. It allows for freedom from ALL estate taxes. It also provides a number of additional benefits including tax-free build-up of cash value, tax-free receipt of the death benefit, and access to a wide-range of global investments.
And as always, you can check our website for more information on any of these items. Visit www.sovereignsociety.com to learn more.
In Wealth & Prosperity,
ERIKA NOLAN, Executive Director