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Lombard estate planning lawyersLast week, we started a discussion about common myths that many people believe about the process of estate planning. In that post, we talked about how it is never too early to begin estate planning and why probate is not always a terrible thing. Unfortunately, there are a number of other misconceptions that can cause unsuspecting individuals to make preventable mistakes as they draft their estate plans. Let’s look at a few more:

Myth: If I Die Without a Will, the State Will Take Everything

While there is no question that estate planning is important, it is not uncommon for some people to develop a plan only out of fear. Such individuals often believe that if they do not draft a will or create an estate plan, their property will be seized by the government and not distributed to their family members.

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Posted on in Estate Planning Blog

Lombard estate planning attorneyAlthough he was not the first to make such an observation, Benjamin Franklin wrote to a friend in 1789, “Our new Constitution is now established, and has an appearance that promises permanency; but in this world, nothing can be said to be certain except death and taxes.” The tongue-in-cheek quip was not really a commentary on death or taxes, but on his hope for a new country in its infancy. What his contemporaries may not have predicted is that some 240 years later, there may actually be a type of death tax. While “death tax” is not exactly an accurate description, it is possible for the government to claim a portion of a recently deceased person’s estate.

Estate Tax Defined

According to the Internal Revenue Service, the federal estate tax is a formal tax on your right to transfer your assets and property upon your death. The estate tax applies to those the portion of an estate that exceeds a minimum value standard. The standard is increased every year to account for inflation, and, in 2016, that minimum is $5.45 million per person. Those with an estate valued at more than that amount could be subject to the estate tax.

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