Planning

As we move through the new year, we may have made resolutions, created a To Do list, or just have mentally thought about different things that might need attention.  Regardless of your method, one very important item that you should give priority to is to address your estate planning and to determine if it needs to be updated.  Or in some cases be prepared, as you don’t have any documents in place.

You may think that even if you have done your estate planning in the past that you needn’t think further about it, you are so wrong.  Situations change in your life as well as in the lives of your beneficiaries.  Illness, creditor issues, marital situations, disability, death – just to name a few.   Tax laws change. Any one of these can have an impact on your estate planning. 

            Here are some thought-provoking questions for you to ponder:

• If your spouse has died since you prepared your estate planning, have you reviewed your documents to make certain that you are covered with fiduciary – executor, power of attorney and living will/health care directive agents – appointments? 
• Are any of your beneficiaries experiencing creditor issues that you may want to protect any potential inheritance?
• Are any of your beneficiaries having marital difficulties?  Even if they are in solid marriages, do you have specific feelings as to whether you would want the beneficiary’s spouse to benefit or would you prefer to ensure that the next generation benefit.  For example, if you name your children as your beneficiaries but a child predeceases you, do you wish for your grandchildren to benefit or do you wish for your child-in-law to benefit?
• If any of your beneficiaries have stepchildren, do you wish for them to be considered a child?  How about adopted children? 
• If a potential beneficiary is disabled and receiving governmental benefits, special consideration should be given in your estate plan to ensure that the disabled beneficiary would not lose any governmental benefits they may be receiving.
• If your distributions are to be made to beneficiaries for whom inheritance tax may be assessed, who do you want to pay those inheritance taxes?  Laws differ greatly by state.
• What is the impact between probate assets and non-probate assets (beneficiary designated assets/jointly owned assets) and your desired distribution?
• Depending on the size of your estate, might it be beneficial for you to engage in gifting of assets?
• If you are charitably inclined, based on the makeup of your wealth, are there options regarding charitable donations that could reduce your income taxes while you are living?
• If you have a child living with you who is providing care services, what are your thoughts about the child receiving compensation of some sort for their services?  Do you need to have a care agreement in place? 

More than anything, I caution you against using free forms found on the internet for estate planning purposes.  Often times there may be discrepancies that you would not know about.  A couple of examples are:  Are they specific to your state of residence?  Do they provide guidance on the necessary signature requirements and witness and notarial requirements?  Have they addressed tax payments?  Do they give you guidance on any specific situations for you or your estate (as mentioned above)?

Even if you think that your estate planning is simple, there is usually one little detail that can necessitate special attention that could have an impact. 

Why not put your estate planning review (or preparation) on the same timing as preparing your income taxes?  Why not get the burden of both off of your shoulders at the same time?