You may or may not need an estate planner depending on your situation. First of all, if everything is going to a spouse, your estate would qualify for the unlimited marital deduction and would not incur estate taxes. Secondly, and generally speaking, if your 2008 taxable estate is less than $2 million there are no federal estate taxes (Maryland has complicated the situation by using $1 million for the state estate tax limit). I do recommend that you see someone regarding your estate plan even if you think your estate will not incur estate taxes. There are many planning opportunities to reduce estate taxes at the second spouse’s death. Trusts may or may not be useful (e.g. revocable living trusts do not reduce estate taxes but help your estate avoid probate; certain charitable trusts would help reduce future estate taxes or current income taxes). There are also a lot of pitfalls (e.g. beneficiary designations say something different than your will does). An estate planner who charges by the hour (e.g. a tax attorney, a CPA or a fee only CFP) can help you assess your situation (e.g. identify if you have a taxable estate, issues or opportunities), review various alternatives if you do have a taxable estate and make recommendations. There are also insurance agents who specialize in estate planning, particularly with large illiquid estates that need policies written to pay anticipated federal and/or state estate taxes. However, please note that only an attorney should draw up the final legal documents for you and your documents should be updated at least every five years.

Establishing an estate plan includes creating a will, assigning power of attorney, a living will or medical power of attorney, and possibly one or more financial-based trusts. Whether your estate is small or large your goal is to make sure that there is someone you trust who will manage your assets and make health care decisions for you if you are unable to do so for yourself. For small estates the focus will be on making sure that your assets are distributed as you wish, your debts are paid and your affairs managed appropriately. For larger estates your financial adviser and attorney may work together to determine ways to reduce your tax liabilities and preserve your assets for your heirs. While you can create most of these forms yourself, it would be in your best interest to have an attorney prepare these legal documents for you. If you are working with a good financial adviser, she/he will be able to refer you to the appropriate legal, tax and insurance professionals who will assist you in creating a sound estate plan.

It sounds like you have a typical “sweetheart will,” where everything goes to your spouse and then to the children. Your will may be fine; it depends on the size of your estate. If your gross estate is over $1 million, then this type of will may result in estate tax being paid to the State of Maryland and to the IRS. It is important to remember that for your taxable estate that your real estate, investments, 401(k), IRAs, and life insurance depending on how it’s held are included so it does not take long to get to a million-dollar estate. An estate planner can help you through the use of credit-shelter trusts make your estate tax-free for Maryland up to $2 million and for the IRS up to $4 million. As far as who you go to discuss your needs, you will want to either go to an estate planning attorney, or a CFP or ChFc. They will be able to guide you through the process of not only making sure that your documents are set up correctly to take advantage of the tax-sheltering but to also make sure that your assets are titled properly to let the plan work. Estate taxes at the federal and state level are high, so make sure that if your estate is above or close to $1 million that you do the necessary planning to minimize any potential tax liability.