Another Tax Trap
Posted by Warren Peterson on June 29, 2010
My wife and I attended a presentation on estate planning and recent changes in the law. It covered wills, trusts, probate, taxes and other topics all designed to keep the government’s hands off ones money for as long as possible.
Most people know you should have a will. Some also know the need for financial and health powers of attorney. But few understand the perils, even for modest estates, that await the beneficiaries if the deceased did not consider the tax rules regarding IRA’s, death taxes and probate.
Lawyers get rich writing wills, establishing trusts and in some states (not Washington) collecting large fees from probate They earn their money preparing the documents to protect estates from paying too much and paying too soon. They love changes in the law because that usually means updating all those documents.
After listening to the talk, I wondered why we have to hire attorneys to protect our own money? Why can’t the IRS and state tax departments be authorized to calculate the most favorable treatment possible and apply it to one’s estate? Better yet, having taxed the money numerous times along the way (income tax, sales tax, property tax etc.), just let folks leave their estate to whoever they choose tax free and keep the government out of it?