Make wise moves before end of year

A. Colby Parks
For Senior Scene

No one knows everything.  Yet, we all hate to hear the words, “You should have done this instead.”  To help you avoid that awkward situation, there a few important matters to address before the end of the year 2012.

For example, if you do not have a complete estate plan: do that first.  Even if it only means you name someone to help you manage your affairs if you cannot … do that next.  This will protect you and your estate from losses of privacy and significant amounts of money in a guardianship proceeding.

Additionally, according to a recent article in Forbes magazine (April 2012) more and more people look to the Internet to prepare their own wills and trusts even though commentators,  (see the Forbes article from May 17, 2011), have reported that these do-it-yourself solutions are a recipe for disaster.  Ideally, estate-planning documents are the culmination of a carefully considered financial and estate plan.  A stack of stand-alone homemade documents will not do.  Furthermore, those pesky local details (i.e., the “formalities”) in a well-written and valid legal document vary from state to state.

Internet sites may provide you with documents but no actual advice that fits your particular financial and personal life.  What happens when the laws change?  The law will change at the end of 2012.  Does your internet-guided plan trigger an unnecessary tax if our state and federal tax laws diverge substantially?  Whatever plan you have created, have it reviewed by an estate-planning attorney before the end of the year.

Also, keep in mind that making gifts during your lifetime is a simple and effective estate tax minimization strategy.  IRS regulations allow you to use exemptions now, which may be wiser than waiting to use them at death because the current rules expire at the end of 2012.

Above and beyond the amount you currently are allowed to give away each year ($13,000), the federal exemption amount allowed for transfers during life (gifts) and death (estates) has increased (by indexing) to $5,120,000 per person for 2012.  This is the highest it has ever been since the estate tax was established.  Wealthy individuals, who have the means and desire to do so, should plan on making these gifts during 2012.

Finally, maximize your annual gifting.  Making annual exclusion gifts (in addition to charitable gifts to your church, alma mater, the United Way, etc.) every year to family members, or anyone close to you, (depending on your personal financial situation) is good planning.  Over the long run, you can transfer significant sums of money out of your estate, along with the appreciation, thereby reducing the amount of tax that may be due.

A. Colby Parks practices law in Tacoma and is a member of WealthCounsel, a national association of estate planning attorneys.  You can reach him at (253) 682-1960 or at