An individual may give up to the annual gift tax exclusion amount (currently $13,000 and indexed for inflation) to as many people as desired each year without any gift tax consequences.Lifetime gifts may be used to decrease the donor's taxable estate.Unlimited amounts can be given to a spouse (except non-citizens) or to a school or medical facility for a person's tuition or health care. Payment for qualified medical and educational expenses must be made directly to the service provider. Gifts and inheritances are not taxable to the recipient but, of course, the interest earned on this money is. Seek professional assistance for high net worth estates or complicated asset transfers. Donors must be careful not to leave themselves short of income. Plan for the disposition of untitled personal property. This is all the items people own for which the owner is not identified in a written document. Examples include tools, furniture, books, dishes, collections, jewelry, clothing, and more. Talking about untitled property can be sensitive because of the emotions involved, sentimental meanings attached to various possessions, and differing perceptions of what's fair in the distribution process. Also, unlike a bank account or stock, there is often only one of an untitled property item, so it is impossible to divide everything exactly equally. Untitled personal property can be distributed in several ways, including memorandums attached to a will, lists given to a person's executor or family members, gifts made during a donor's lifetime, drawing names out of a hat, verbal promises, and labeling items.Communicate openly with heirs about intentions to leave an inheritance. It is often easier for parents to bring up the subject than for adult children to risk appearing "greedy." Beneficiaries should never use a potential inheritance as an excuse not to save. There are simply too many unknowns such as the donor's health, long-term care needs, and life expectancy.Recent research by AARP found that, for most baby boomers, inheritances will be a small part of their retirement nest egg. The median (midway point) value of inheritances received through 2001 was just under $48,000.

Trusts ... A well-written trust could help your heirs to avoid the probate process, thereby potentially saving them money. Did you know that your heirs may need to file a petition to probate your estate ... even if you have a will? However, if a living trust has been prepared and funded properly, your heirs could avoid probate.

Anyone who owns or has anything has an estate. You estate might include a home, cars, bank accounts, stocks, bonds, mutual funds, life insurance policies, retirement plans, business interests, furniture and other miscellaneous personal goods and household effects. A Last Will and Testament, a Trust and other estate planning documents can include provisions that aim to minimize or reduce the expenses commonly associated with settling or administering an estate and, perhaps, save on the inheritance or estate taxes related thereto. As a result, more of your property will ultimately pass to your love ones and other intended heirs. For example, unless you have clearly stated it in your Will or other legal estate planning document, you would be unable to leave a gift to a charitable organization because under Pennsylvania intestate state laws your estate would only be distributable to your nearest living next of kin.

Estate planning is good because you can choose someone to be in charge of your property, money, business and so on. You can give your estate to your spouse, your children, or a friend. It must be someone that you trust to be in charge of your life's work. When doing your estate planning, you can choose to sell your business or appoint someone that you trust to run it.

Even if you have previously put an estate plan into place, it is always a good idea to periodically review same especially when changes in relationships or economic circumstances occur or take place. Likewise, your estate planning documents may need to be changed or modified when federal and state estate or inheritance tax laws change or are revised. Beneficiary designations on your retirement savings plans and life insurance policies should also be reviewed periodically to make sure they are current with your present wishes and not in conflict with any provisions contained in your current estate plan. Errors in beneficiary designations can lead to unintended fighting among your loved ones and other heirs and delays in providing for their financial needs.

One of the most common estate planning mistakes made is failure to update documents on a regular basis. After all, a document drafted 25 years ago is likely to have diminished in relevance completely. Laws are frequently updated and family landscapes change from year to year. Seek the assistance of a qualified estate attorney each time the law changes or your family dynamic is altered.

If an individual chooses to draft a Will, they must also have a designated power of attorney or conservatorship to manage their property and assets. In addition to requiring another appointed position, they may also cost more money in the end. Initially, Wills cost less than trusts, but the money it takes to go through the probate process can end up costing the beneficiaries more money than the original grantor saved by opting out of a Living Trust.

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