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A test of wills:
Do you need an estate plan?

Often, an individual's desire to pass on a legacy, such as a family business, is not realized because the estate lacks liquidity to pay the taxes and administrative expenses. Or the individual fails to establish a valid will or other testamentary document, so property passes to people other than those desired.

Estate planning is not just for wealthy people. An estate plan is essential for anyone who wants to have a say in how their property will be distributed at their death.

How much do you know about what will happen to your estate upon your death? Take our quiz to find out.

Learn more about how your estate is taxed.
Do you know what happens if you don't have a will?

1.	At your death, your estate's personal representative must file the federal estate tax return if the value of all your property exceeds __________ in 2000-2001.

	$150,000 $400,000		$675,000 $1,000,000

2.	Amounts exceeding this exclusion are subject to a federal estate tax ranging from:

	25% - 30% 31% - 36%		33% - 41% 37% - 55%

3.	If you don't have a will, you die:

		Without beneficiaries		Intestate
		Subject to more federal taxes		Subject to more state taxes

4.	You should have a will if you:

		Have children or a business		Want to determine how your property is distributed and managed after your death
		Want to maximize tax savings for your estate		All of the above

5.	If you fail to create a will or other testamentary document before you die, ____________ distributes your estate.

	Your children Probate court		Your mother and father, if they are still living Your spouse

6.	A _______ trust goes into effect when you die.

	Testamentary Living		Probate Revocable

7.	The Internal Revenue Code allows you to gift up to _______ a year, or ___ for a gift-splitting married couple, to each recipient with no gift tax consequences.

	$1,000, $2,000 $3,000, $5,000		$7,500, $10,000 $10,000, $20,000

Your score = Correct answers: Answers

How your estate is taxed
At your death, your estate's personal representative must file the federal estate tax return (Form 706) if the value of your property exceeds your exclusion amount.

Applicable exclusion

Years

Amount

2000 - 2001

$675,000

2002 - 2003

$1,000,000

2004 - 2005

$1,500,000

2006 - 2008

$2,000,000

2009

$3,500,000

2010

$0

2011

$1,000,000

What happens if I don't have a will?
If you die without a will or other testamentary document, the probate court distributes your estate according to state laws. About a third of the states have adopted all or part of the Uniform Probate Code, which provides for the following structure for distributing property if you die without developing an estate plan (intestate):

If there is a surviving spouse and no surviving children or surviving parent of decedent, all property passes to the spouse.
If there is no surviving children but decedent is survived by a parent or parents, the first $50,000, plus one-half the balance of the estate passes to the surviving spouse. The remainder passes to the decedent's parents.
If there is a surviving spouse and surviving children of both, the first $50,000 plus one-half the balance of the estate passes to the surviving spouse. The remainder passes to the surviving children equally.
If there is no spouse and no children, the property is divided evenly between your parents. If no parents are living, it is evenly divided among the decedents of your parents, namely your siblings.
If there is no living relative, the property reverts to the state.

In addition, the probate process is time consuming and expensive. Consult your financial professional to learn how to protect your estate.

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