Estate plans are not just for the 'rich.'
Whoever won that ginormous Mega Millions $1.337 billion jackpot needs some serious estate planning advice.
Don’t fixate on the whopping big federal estate tax exemption The vast majority of folks are not currently exposed to the federal estate tax, thanks to today’s ultra-generous $12.06 million exemption for singles — or effectively $24.12 million for married couples. That’s good, but being exempt from the federal estate tax is not the end of the story. If you have minor children and some assets , you probably need an estate plan regardless of your exposure, if any, to the federal estate tax.
You establish the living trust and transfer legal ownership of assets for which you wish to avoid probate to the trust. For federal income tax purposes, the existence of the living trust is completely ignored while you’re alive. As far as the IRS is concerned, you still personally own the assets that are now in the trust. So you continue to report on your Form 1040 any income generated by trust assets and any deductions related to those assets .
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