Every fall I’m amazed by how quickly the landscapes change. Change is constant in so many areas of life that we are not always great at perceiving those changes. Every 4-5 years I like to remind everyone that time is also affecting the structure of your estate plans. The goal of good estate planning is to get it right; to avoid conflict and create the least amount of additional stress during a stressful time.
One of the biggest challenges we face is getting people to understand how broad estate planning is. In most cases, when you mention it – people think of the thick envelope or three-ring binder of papers they got from an attorney 10 plus years ago. Or maybe you’ve been avoiding the topic altogether for the last ten years.
Add to these the changes Congress continues to make, and it reminds us we really need to revisit our plans and confirm they are still up to the task of accomplishing our goals.
- Passage of Time: Think about how old you are (sorry) and the ages of your heirs when you last thought about all of this. Were your kids minors, were they married, did you have grandkids? The plan you had then may or may not accomplish what you would choose to do now. I generally recommend that you re-think where you are every five years (unless events demand changes sooner). None of us can look far into the future and our planning should not attempt to either.
- Beneficiary Issues: You likely have one or more assets that your will (or trust) has no authority over. In most cases IRA’s, life insurance, annuities, pensions, 401(k)’s, and other assets operate outside your normal estate plan. The distribution of these assets will be controlled by the specific beneficiary designations on each asset. We see more unintended mistakes and missed planning opportunities in this area than almost any other.
- Ownership issues: How things are owned matters. If you have a trust, are ALL pertinent things you own titled in the name of the trust? If it has a title or if it is an account, its ownership needs to align with your overall plan. Have you decided to put adult kids on any of your existing accounts? This often seems like an easy way to let them help – but it can cause unintended consequences if not executed properly. Many things are more complex than they might seem on the surface.
- Tax issues: Oddly enough, most of the tax-planning for your estate should be executed long before you pass. New rules on beneficiary IRA’s have the potential to change the way we generate income now. By choosing which dollars we will spend first, you are deciding what will be left to pass on, and how it may be taxed. Also, whether you’re giving to charities from your retirement accounts or helping your kids/grandkids with important goals like education, knowing what you value and what outcomes you want to see is a vital part of your plan.
- Family Issues: Life brings all kinds of surprises to the table. Maybe you have 20 grandkids, maybe you don’t have any (keep asking – they love it when you ask!). All kinds of life events could trigger a reconsideration of your plan. For example, have any of your heirs or trustees; passed, had additional children, experienced a divorce, had a significant health change, experienced significant legal issues, become incapacitated? Has the change been a positive one? It can still create challenges.
Good planning is much more than making sure the right people get your stuff. It really is about passing on your Values First, and then aligning your resources to support those values. If you need help updating your plan or thinking through a family challenge – Let us help!
This newsletter is not intended to be individualized tax advice or legal advice. Please discuss such issues with a qualified tax advisor.