Everyone has an estate plan; however, it comes down to whether you want it personalized to your wishes or not. You see, if you have not done the work ahead of time to organize and plan, your resident State has a plan for how they handle the distribution of your assets once you pass. That means that regardless of how you feel about it, your estate will go through probate (which could take months), making your estate public, and ultimately be decided by people who don’t know you or your family’s needs.

Effective estate planning involves creating a will(s) and/or trust, designating executors, trustees (in the case of a trust) and beneficiaries. Typically, it includes planning your possible incapacitation, which includes documents for your healthcare and financial decisions. This not only provides peace of mind for you and your loved ones, but also ensures that your financial and personal affairs are handled in a manner that reflects your values and intentions. Proper estate planning can prevent legal disputes, protect your heirs, and facilitate a smoother transition of your assets, ultimately preserving your legacy and providing for the future of your loved ones. 

Currently, if your estate is less than $13.61 million in assets, you may not need to worry about federal estate tax. This amount is good through the end of 2025 when the 2017 Tax Cuts and Jobs Act (TCJA) expires. However, beneficiaries may have to pay Income tax and capital gains tax depending on the  assets they inherit. This could become a substantial financial burden to your loved ones. Remember spouses inherit estates completely estate tax free. Children and other people or entities do not. Often times it is the second death that causes the problems concerning taxation. Proper estate planning should include proactively organizing your estate in a way that reduces the tax burden placed on your heirs. Luckily there are strategies to help you remove some of that tax burden.

One strategy is to create an irrevocable trust, which may help alleviate some tax burden because it transfers the ownership from the original owner to the trust. Because those assets no longer belong to the person who set up the trust, they may not be subject to inclusion in an estate when that person passes away. Another benefit to using a trust is it removes the probate process from the dispersal of your assets and keeps your estate private.

Another option is to make small, non-taxable gifts to your heirs during your lifetime. The IRS allows you to gift up to $18,000 per person without filing a gift tax return. By giving your loved ones the maximum gift each year, you reduce the size of your estate, thereby lowering its taxability.

When the TCJA expires at the end of 2025 if it is not renewed by congress and the president, the estate tax exemption could revert to about half its current level. It’s also important to know your state laws pertaining to estate taxation, because several states have lower estate tax thresholds than the federal government’s. When in doubt it is always wise to seek the advice and counsel of an estate planning attorney to help you settle your estate in a way that is best for you and your family.

Photo by Dan Meyers

We’ve been hearing about unemployment on the news a lot lately, especially leading up to the Fed’s meeting back in August. The Fed expressed concern about the unemployment rate, stating that was part of the data they took into consideration when deciding to lower interest rates.

The official unemployment rate we hear about on the news is called U-3 measure. While this is the data broadcast most often, it unfortunately does not give a complete picture of the unemployment situation because it only accounts for unemployed people actively searching for jobs within a 4-week window.

The unemployment rate in the US fell from 4.3% to 4.2%, representing 7.1 million people looking for work, which means, in theory, fewer people were unemployed. However, this does not include Discouraged Workers. These are adults who have looked for jobs at some point in the last 12 months but are not within the four-week period. Often, they have given up looking for a job (possibly temporarily). Ignoring these people makes it seem like there are fewer unemployed people.

Another issue with the U-3 unemployment measure is it does not take into consideration the quality of jobs that workers are accepting, nor does it distinguish if they are working part-time or temporary jobs.

The Real Unemployment Rate (U-6 measure) uses the data from the U-3 measure as well as four other measures of unemployment accounting for people outside the four-week window. Using this data will give a much better understanding of the actual unemployment situation in our country.