By Jan Blakeley Holman, CFP, ChFC
Financial advisor, Smegal & Associates Wealth Management Group of Wachovia Securities

In life we’re challenged to find a balance between today and tomorrow. As youngsters we’re told to “live for today.” But once we start our careers we hear that we need to focus on the future and invest for tomorrow. Finding the proper balance between now and later has always been difficult. Some of us never learn how to appreciate today, choosing instead to obsess about the future while the rest of us never get around to planning for the future because we’re only comfortable living in the moment. So, at the time of the year when we’re usually obsessed with today’s tax, the income tax, let’s consider some future taxes that may affect our families - estate taxes.

According to the U.S. government, the estate tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death.

If you’ve done any reading on the subject of estate taxes you know that the future of federal estate taxes is uncertain. Between now and 2010, the amount of the estate tax credit that we can apply to our estate tax bill rises annually. President Bush recently called estate taxes, “A lousy deal” and unless Congress takes some action, in 2011 the level of the estate tax credit is scheduled to drop back down to pre-2002 levels. But, don’t expect estate taxes to totally disappear, because most experts assume there will be some federal estate tax. They remind us that in many states estate taxes are a reality that shouldn’t be forgotten when planning. 

Whether or not you’re affected by estate taxes is determined by the value of your estate at death. Therefore, it holds that the higher the value of your estate the more likely you are to pay estate taxes. Will you owe estate taxes in the future? To get an answer to that question you may want to take the following action:  

• First, get a will. What is it about wills? For some reason too many of us don’t have one. Is it because we don’t want to accept the fact that it may be good business sense to have a will? Or is it simply a matter of procrastination?  Whatever the reason, if you love your family, you must have a will. Why? Because wills and their related trusts are the legal documents that guide how we intend to own and title our property today and who will get our property in the future. In the process of creating a will your attorney will help you identify what will be included in your estate.
• Second, follow through. All too often individuals work with an attorney on a will but once the will is signed, they need to be sure that their accounts and assets are titled in a manner that is consistent with their attorney’s recommendations. Do the rest of the work!
• Third, share your will and intentions with your family. Apart from having a will, the second best way to help your family manage your affairs after you’re gone is to take the time now while you’re still here to discuss your bequests. Get the conversation out into the open.   
• Finally, repeat the process. Once you have a will, update it to reflect any life or relationship changes and the passage of time.

Paying and managing your income taxes in the short-term and having a will that reflects your long-term wishes is a great way to bring balance to your tax situation and life.

Jan Blakeley Holman is a 30-year veteran of the financial services industry. She regularly speaks with groups on the value of planning and preparing for the future.

Under a “Sunset” provision, the changes to tax law under The Economic Growth and Tax Relief Reconciliation Act of 2001 are scheduled to expire on Dec. 31, 2010, and do not apply for tax years after this date unless action is taken by Congress. Therefore it is important to confer with your tax advisor as to the potential impact of the sunset provision.  

The accuracy and completeness of this article are not guaranteed. The opinions expressed are those of the author and are not necessarily those of Wachovia Securities or its affiliates. The material is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Wachovia Securities, LLC, member New York Stock Exchange and SIPC, is a separate nonblank affiliate of Wachovia Corporation.