Posted: October 3, 2016

What is the value of my estate?


 

    In my experience, most people undervalue their estate’s worth. In most cases, they do not understand what their estate is or how to calculate its value. The value of your estate is important to know as it helps to determine two things: how much you may have available to leave for any forced heirs, and whether or not you have to pay a Federal Inheritance Tax.  The Federal Inheritance Tax will not come into play unless your estate is over $5.43 million dollars for the 2015 tax year.  While a very limited number of us have estates worth over five million dollars, we all have estates worth something, and we may have a forced heir that we need to account for.  

 

    Remember, a forced heir is an heir (child) that at the time of the testator’s death has not reached the age of 24, or is unable to physically or mentally take care of themselves.  Louisiana law restricts a testator’s ability to distribute his wealth as he sees fits to ensure these Louisiana citizens are taken care of and do not become a burden to the State.  The calculation of the estate is important, because it determines the value of the portion that the forced heir is entitled.

 

    If you have used our office in the past, or a friend recommended you to take a look at the Donovan Law Firm, LLC, you may be aware of our “Will Intake Form.”  This is a document that serves a business purpose (i.e. a client’s phone number address, etc.), but more importantly allows the client to reflect on what actually is his estate.  You have a car, and a house, but you may also have a valuable piece of art that needs to be appraised, or your great-grandmother’s jewelry, or an heirloom from your great-grandfather.  Or you may realize you have a lot of “stuff”, but that it came with a lot debt and liabilities.  These are all things that can be factored into your estate and your decision on how you want your estate to be distributed - for example, “Do I want my kids to have that separate piece of property on the coast that is still heavily mortgaged?”

 

    Another consideration is the classification of property as community or separate.  If property such as your house or car are community property, then ½ of their value will be factored into your estate.  Additionally, a husband or a wife may have inherited property that would increase the value of their individual estate, and would not be included in the other’s. For instance, the piece of property that was inherited from your Uncle Rich needs to be added to your portion of the community estate.   


    From the previous examples, it is easy to understand that what we consider our property - money, land, stocks/bonds/mutual funds, and other movable property would be included in our estate.  But there are also a lot of unknowns regarding the value of property, classification of property, estate debts, and property that may fall outside of the wille (i.e. Life Insurance Policy). If you have questions about how to calculate your estate or how to develop a strategy to create a successful estate plan that will protect your family’s future, call our office today.  


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