Throughout 2013, the federal estate tax exemption will remain steady at $5.25 million per person. That means that if you are a married couple, you won’t have to pay a single penny in estate taxes as long as your estate is worth less than $10.5 million.
So, since most people don’t have anywhere near that amount, this means that they don’t have to create an estate plan, right?
Wrong. Even though a good estate plan will help those who might have to pay estate taxes, even those who don’t have to worry about it need a plan. Here’s why.
You might need Medicaid.
The cost of long-term care goes up every year, and if you ever need to go to a nursing home you can expect to pay $70,000 per year or more. Even staying in a nursing home for a handful of years will greatly reduce your assets, unless you’ve created a Medicaid plan well in advance.
You have children.
Even if you aren’t retired and aren’t anywhere near senior citizen status, you will probably need to create an estate plan as soon as possible if you have young children. If something should happen to you, you will need to have a plan in place so a guardian can take over caring for your child as soon as possible. You also need to make sure the child has financial protections ensured through the creation of one or more types of trust.
