What Type of Estate and Tax Planning Do I Need to Do?

Without a will, your assets could be held in probate court and distributed according to state law.

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However, a trust only benefits your estate if you actually transfer assets into it. According to Mayoras, failure to transfer all assets was one of the issues with the Michael Jackson estate and is a common estate planning mistake.

[See 6 Celebrity Estate Planning Errors—and Tips.]

As you age and perhaps divorce and remarry, it's also important to keep your beneficiaries updated. Otherwise, an ex-spouse could have the power to make life-altering healthcare decisions or receive an inheritance. As children reach majority, trusts should be updated to remove age-terminating trusts as appropriate.

Estate tax is another faucet of estate planning, which is further complicated by fluctuations in the estate tax exemption. Currently, the federal exemption is $5.12 million, but it's scheduled to reset to $1 million in 2013. For those whose assets exceed the exemption, here are a few strategies for minimizing estate taxes:

• Set up specialized trusts. Certain types of trusts can minimize estate tax. For instance, under a GRAT (grantor retained annuity trust), you would receive an annuity for a fixed number of years. "If the individual lives until the annuity payments end, anything that passes to successor beneficiaries will be gift and estate-tax free," says Blattmachr. "The GRAT will be 'successful' if the property owner lives until the annuity term ends and if the trust property has gone faster than the IRS has forecast." However, the benefits of GRATs and other specialized types of trusts may restricted in the future. A charitable remainder trust, where money is distributed to heirs for a period of time and then to a charity, is another option for tax savings.

• Transfer over time. Instead of waiting until you die, you could transfer assets or property gradually to reduce the estate tax liability. For instance, if you wanted to leave a vacation home to your two children, Sara Robicheaux, dean of business programs and associate professor of finance at Birmingham-Southern College, says, "you could essentially break it up into shares and give away 1/20 to each child each year, and over 10 years, the entire ownership shifts to the children."

[See Questions to Ask When Drafting an Estate Plan.]

• Pay educational or medical costs. In addition to gifting up to $13,000 ($26,000 if you're married) in cash or property without tax implications, you can also distribute assets by paying the tuition (not room and board) or healthcare costs of someone else. "If, for instance, you have a grandson who's going to medical school, grandma or grandpa can pay that and it won't be considered a taxable gift," explains Blattmachr. Be sure to discuss that option with your financial planner to ensure that you won't need that money later.

• Move to a different state. Several states have their own estate tax, and the exemption is often lower than the federal exemption. For instance, it's currently $675,000 in New Jersey, so that would impact smaller estates. These can also fluctuate, according to Blattmachr, but if you're living in a state with high estate tax, he says it's worth considering a move before you die.

Although several websites offer templates for creating a will and other legal documents, the experts who spoke to U.S. News recommend hiring a professional to avoid mistakes while navigating complex estate laws that vary by state. (Rocket Lawyer, mentioned earlier, offers a hybrid model by combining online tools with referrals to lawyers to review legal documents.)

Mayoras says she's had people come to her office with wills or trusts that weren't created correctly. "If you don't use an attorney who specializes in this area, you're losing a lot of possibilities that you would otherwise have," she adds. "What if there isn't an estate tax situation? What happens if your children pass away? There's a lot of what-ifs, and there's no way checking boxes on a form is going to account for that."