Top ten reasons to start estate planning
Why you should start estate planning for the future

1. It's important to have a basic estate plan in place, no matter your net worth. Such a plan ensures that your family and financial goals are met after you die.
2. An estate plan is comprised of several elements including a will, assignment of power of attorney, and a living will. A trust may also make sense for some people. You must be mindful of both federal and state laws governing estates when putting together a plan.
3. A good place to start is taking inventory of your assets. Your investments, retirement savings, insurance policies, and real estate or business interests all contribute to your assets. Always ask yourself these three questions: Who you want to inherit your assets? If you're ever incapacitated, whom do you want handling your financial affairs? If you become unable to make them for yourself whom do you want making medical decisions for you?
4. Since a will tells the world exactly where you want your assets distributed when you die, everybody needs a will. A will is also the best place to name guardians for your children. Dying without a will may be costly to your heirs and leaves you no say over who gets your assets. You still need a will to take care of any holdings outside of that trust when you die, even if you have a trust.
5. Trusts are not just for the wealthy anymore--they are legal mechanisms that let you put conditions on when and how your assets will be distributed upon your death. They also allow you to reduce your estate and gift taxes. They allow you to distribute assets to your heirs without the cost, publicity, and delay of probate court. Some also offer greater protection of your assets from creditors and lawsuits.
6. Prevent disputes or confusion by discussing your estate plans with your heirs. Inheritance can be a high-conflict issue, and you help dispel potential conflicts after you're gone by being clear about your intentions.
7. The amount you’re permitted leave to heirs free of federal tax, otherwise known as the federal estate tax exemption - has been rising gradually and will hit $3.5 million in 2009. The top estate tax rate is also coming down. Unless Congress passes new laws between now and then, the estate tax is scheduled to phase out completely by 2010, but only for a year.
8. You may leave an unlimited amount of money to your spouse tax-free, although this isn't always the best tactic. Actually, if you don't use your estate tax exemption you may instead increase your surviving spouse's taxable estate by leaving all your assets to your spouse. If your spouse leaves them the money when he or she dies, that means your children are likely to pay more in estate taxes. It also defers the tough decisions about the distribution of your assets until your spouse's death.
9. You can give gifts tax-free and reduce your estate two easy ways. You may give up to $12,000 a year to an individual, or $24,000 if you're married and giving the gift with your spouse). If you pay the expenses directly to the institutions where they were incurred you may also pay an unlimited amount of medical and education bills for someone.
10. If you donate to a charitable gift fund or community foundation, your investment can grow tax-free and you can select the charities to which contributions are given both before and after you die.