What if I have assets in excess of $1 million?

More advanced estate planning is necessary if your assets total more than $1 million, or whatever the current applicable exclusion amount may be. However, $1 million is a good baseline because it is the Minnesota exclusion amount (Note:This may have changed since the time of this writing; check with our firm for current exclusion amounts).

Many people underestimate the size of their estates. Your estate assets include:

• Investments

• 401k & IRA Retirement accounts

• Bank accounts

• Real estate

• Business interests

• Life insurance

• Automobiles

• Jewelry

• Collectibles

• A single person with assets of less than $1 million dollars can establish a simple will that distributes assets as chosen, after debt obligations are satisfied.

• It is important to do a periodic review of an estate plan with your attorney. Factors that can necessitate the review of a will include:

  • Moving to a new state

  • Death of a spouse or beneficiary

  • Marriage or divorce

  • Birth or adoption of children

  • Change in value of assets

  • Change in asset structure

  • Beneficiaries’ marriage, divorce, or birth of children

  • Tax law changes

• An effective strategy now can prevent your beneficiaries from being forced to liquidate assets, potentially at a loss. Estate tax liability must usually be paid to the state and federal governments within nine months of death.

• You may benefit from consulting a variety of professionals to determine and implement your best options. Your estate planning team could include: a Frundt, Lundquist & Gustafson, Ltd. attorney, an accountant, and a financial professional.

• Estate planning may involve strategies to:

  • Plan for and cover estate taxes and other expenses

  • Reduce the size of your taxable estate

  • Achieve a combination of both

    For example, one strategy may involve taking required minimum distributions from an IRA you do not need for retirement and structuring with the intent to keep it intact longer. By doing so, you may extend the accumulation period and defer taxes for the benefit of your children and grandchildren. Another common way to reduce the size of your taxable estate is through the use of trusts.