Did you know that if you die without a will, the laws of your state govern how your property is distributed? And did you know that if you die without any heirs-at-law, the state itself may be the ultimate beneficiary? This eventuality occurrence may be avoided with the execution of a simple will.
In general, those who die "intestate" -- that is, without a will -- lose the ability to control the passing of their property to their heirs. Whether it stands alone or as part of an integrated estate plan, a will provides for the disposition of property not otherwise so provided. The execution of a will is a necessity in any estate plan.
Among other things, a simple will can:
- direct the disposition of property according to your desires;
- establish a trust to provide for minor beneficiaries long after your death;
- nominate guardians for minor children; and
- provide for the "pour over" of assets into a previously established trust which were not already transferred to the trust.
Your will is effective only upon your death. As such, you can always amend or revoke your will during your lifetime in order to take into account changes in circumstances or conditions. Indeed, your will should be reviewed both periodically and at the happening of certain events:
- changes in family circumstances, i.e., births, deaths, marriages or divorces;
- your move from one state to another;
- changes in federal or state tax laws; or
- significant changes in assets or property values.
A will does not by itself provide the beneficiary with any income or estate tax benefits. Accordingly, more sophisticated estate planning will be necessary in certain instances such as when your estate is valued above the federal and/or state estate tax exemption amount*. Nonetheless, creating your will may be the first step toward an integrated estate plan.
* The federal estate tax exemption amount is $3,500,000 in 2009. The highest federal estate tax rate is 45% in 2009. The federal estate tax will be repealed on 1/1/10 until 12/31/10. Beginning 2011, the federal estate tax will be reinstated with a federal estate tax exemption amount of $1,000,000 and a maximum estate tax rate of 55%. Congress continues to discuss and consider legislation that, if passed, would permanently repeal or otherwise lessen the impact of the federal estate tax.
For more information on this subject, and professional guidance in selecting the right kind and amount of insurance coverage, contact your insurance professional.
This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. Pacific Life & Annuity Company, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
This material may only be used in New York.
Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York, and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each company is solely responsible for the financial obligations accruing under the products it issues, and its product and rider guarantees are backed by that company’s financial strength and claims-paying ability. Variable insurance products are distributed by Pacific Select Distributors, Inc. (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company, and are available through licensed third party broker-dealers.
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