Estate planning is an important undertaking for all adults, however most people haven’t given it much thought let alone taken steps to put a plan into place. 

 

There are many reasons why estate planning is important and a number of areas that need to be considered when creating a plan. Because it’s such a broad topic, Attorney Wendy Sturm from Sturm Law spoke to Young at Heart attendees at Rejoice Lutheran Church in Clearwater October 20 to answer questions about two topics that come up often; gifting and health care directives.

 

Although there are many aspects to it, estate planning directs where your assets will go after you die, provides health care instructions if you can’t speak for yourself, and minimizes taxes, court costs and legal fees. 

 

One of the main goals of estate planning is to reduce your taxable estate. Minnesota provides an estate tax exemption for individual estates up to $1.6 million; anything over that amount will incur an estate tax. 

 

Most people don’t realize how much their assets are worth so they don’t believe their estate will be affected. However it doesn’t take much to actually arrive at that amount. Property in an estate encompasses everything a person owns, from real estate, homes, vehicles, tools, equipment and artwork, to proceeds from life insurance, bank accounts, stocks and retirement accounts. 

 

Sturm told the crowd one way to reduce your estate is through lifetime gifting, which takes money out of the estate and benefits the people receiving the gift. You and your spouse can each give up to $13,000 annually to as many individuals as you want without either party incurring a gift tax penalty.

 

The government does look back three years at a person’s death, however, so any gifts that were made in the three years prior are still liable for estate tax.

 

Sturm told the audience another proposal she gives to many of her clients is to prepay their children’s funeral expenses; with an average funeral today amounting to $15,000, it’s another cost many people don’t consider until they’re faced with it.

 

She urged the group to also consider health care directives as another important component of their estate planning.

 

Health care directives are legal documents in which a person specifies what actions should be taken in the event they are no longer able to make decisions for themselves. They are completely customizable, and because they’re legal documents they must followed. 

 

The majority of people haven’t considered health care directives because they don’t believe they’re at the point in their lives where have to worry about them, however Sturm told the group they’re almost more important when you’re younger.

 

Health care directives give your family the gift of peace of mind in the event decisions need to be made in regards to your healthcare that you can’t make yourself. In them you specify exactly how you want your life, and death, to be handled. 

 

One of the more difficult and important decisions you’ll need to make in the process is deciding who you will name as your health care agent. This person will have the authority to stand up for your beliefs and wishes in the event medical decisions arise that weren’t covered in your directive.

 

Although it’s a tough conversation to have, it’s important to sit down with family members and discuss your health care directives. In the event the document is needed, your family will be prepared and the burden of making decisions for you will be removed. 

 

Sturm also encouraged the audience to review their health care directives annually as things change throughout a person’s life. What a person wants and what he or she may be willing to live with at age 25 will probably be different than at age 85. 

 

She told the group about a client she had who had been disabled most of his life. Without a risky surgery he would die within five years, with the surgery he would live but his life wouldn’t be improved. He chose not to have the surgery, as his life was full of pain and he didn’t feel fulfilled any longer. As a younger man his decision would have probably been different.

 

Sturm emphasized that although everyone is at a different place in their lives with estate planning it was an important process to complete, and should be viewed as a positive, protective gift for their family.