Leaving a Legacy

Importance of Estate Planning

The definition of an estate in the simplest terms is the sum of the things you own: your home and any other property, your vehicles, your bank accounts, investments, life insurance policies and retirement benefits, and perhaps your business. In other words, you don’t have to be wealthy to leave an estate when you die – it’s something everyone has. A will and other estate planning documents will simplify the settlement of your estate after your death, carrying out your wishes and perhaps saving on estate taxes.

It’s important to review your estate planning documents periodically, especially when there have been changes in your life or economic circumstances, or when tax laws change. Make sure the beneficiaries of your retirement savings plans and life insurance policies are current as well, as errors in beneficiary designations can lead to all sorts of problems, delays, and unnecessary expenses and taxes.

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Don’t Put Off Writing a Will

We’d all like to feel that we have plenty of time to draft a will. But, the truth is no one ever really knows how much time they have, and if you do have minor children it’s imperative that you not leave their future to the courts to decide. Here are just a few things you’ll want to consider:

  • People who die without a will leave all decisions regarding distribution of their property up to the laws in their state of residence – whether or not this is appropriate for their family’s situation. Estate settlement costs will be greater because a court-appointed administrator must be appointed. A will can cost as little as $50 to $100 to prepare, so don’t let expense be your excuse for putting it off.
  • A family member does not have to be named as executor of your estate. A professional fiduciary, such as a bank trust department, can serve as executor.
  • Avoid conflicts in titling of assets. If family relationships are complicated due to remarriage or other issues, or you have a complex estate, an attorney can help you avoid making titling errors.
  • Make sure the individuals you’ve chosen as executor or guardian have agreed to serve and are fully aware of their responsibilities.
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Gifts and Inheritances

You need to be aware of many rules when planning financial gifts and inheritances. Your First Midwest Financial Consultant is here to help you with all your estate planning needs, but following are some basic things you should know:

  • An individual may gift an amount of money up to the annual gift tax exclusion amount, to an unlimited number of people each year, without any gift tax consequences. These gifts may be used to decrease the donor’s taxable estate.
  • Unlimited amounts of money can be given to a spouse, or directly to a school or medical facility for a person’s tuition or healthcare.
  • When making gifts, be careful not to leave yourself short of income-producing assets to sustain your lifestyle.
  • Communicate openly with heirs about intentions to leave an inheritance. It is often easier for parents to bring up the subject than for adult children to risk appearing “greedy.”
  • Arrangements for the distribution of untitled personal property upon your death (for items like furniture, dishes, collections and jewelry), can be handled in several ways, including memoranda attached to a will, specific lists given to the executor, or gifts made during a person’s lifetime.
  • The important thing is attending to this division of property as part of your overall planning in order to avoid conflict between those left behind.
  • Seek professional assistance for high net worth estates or complicated asset transfers.
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Planning for Estate Taxes

Estate taxes are imposed on the transfer of assets from one person to another upon the donor’s death. The current federal exemption is high enough that, for most Americans, there is no federal estate tax liability for assets transferred upon their death. State estate taxes, however, are another matter, as many states have exemptions on non-spousal transfers as low as $675,000. There are a number of strategies that can be used to reduce a taxable estate, including lifetime gifts, transferring assets between spouses, and bypass trusts. High-asset households in particular should seek professional advice.

Call us at 800-241-1749 to learn how First Midwest can help with all your estate planning needs. We’ll help you structure a solid financial legacy to give you and your family ultimate peace of mind.

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