As a recent MarketWatch article points out, the federal estate tax exemption limit is a robust $5.25 million per person. That means that married couples won’t have to pay any estate taxes as long as they have estates worth less than $10.5 million. With such a high limit, many families in New York come to believe that they don’t need an estate plan at all. However, the New York estate tax exemption limit is only $1 million, so anyone with assets totaling $1 million or more will want to plan to avoid the New York estate tax. Here are three other reasons to have an estate plan, regardless of taxes:
You can still protect your assets from long-term care costs.
The assets you have, even though they may not reach the $5.25 million mark, can be easily depleted once you start requiring long-term care assistance. The cost to stay in an elder care or nursing home facility can easily exceed $146,000 per year or more. Unless you have a Medicaid plan or other asset protection strategies in place, those costs can quickly deplete your savings.
You can make your own medical choices.
Everyone faces the possibility that they might be rendered unconscious or unable to tell their doctors about the kinds of medical care they want to receive. If this should happen to you, you need advance medical directives in place so that your doctors will know the kind of care you want.
You will need to select someone to care for your children if you die.
If you have young children, you must create an estate plan that names a suitable guardian. Your plan should also provide for the child’s financial needs by creating one or more types of trusts.