Baby boomers are largely
unaware of how federal estate taxes could affect their inheritance,
according to a survey by Prudential Life Insurance Co. on estate
planning strategies. Half of those surveyed called themselves "unaware"
about how to reduce inheritance taxes on assets they inherit, or on
assets which they will leave to a spouse, relative, or child.
Sixty-five percent of survey
respondents feel that estate planning is useful only for very high
net-worth individuals. However, they may not be aware that their total
accumulated assets can easily total more than $675,000, the amount at
which the federal government begins taxing estates. To determine the
worth of their assets, Prudential recommends that clients total their
savings, the market value of their home, the value of all retirement
plans such as IRAs or 401(k)s, and the value of any life insurance
policies.
More than half of the survey's respondents did not have a valid will, a major component of estate planning.
"Some people simply take available cash
from the inheritance to pay fees and estate taxes," says Jim Avery,
Prudential's president of individual life insurance. "Those who plan
ahead will often purchase life insurance policies specifically to pay inheritance taxes."
Avery recommends, in addition to a
valid will, that people planning an estate also name a guardian for
their children, review the beneficiaries of their retirement plans and life insurance, complete a living will with health care power of attorney, and create a durable power of attorney.
|
