Estate Planning Yearly Checklist
Dear Friend:
It is critical to review your estate plan annually because laws and your situation often change. If your current advisor did not ask you these questions, let’s meet to be sure your plan is not defective. If you remain with your current advisor, BE SURE you go through this checklist together and have the advisor INITIAL each item for your file. That way, your beneficiaries cannot say you failed to be thorough. Questions suggesting a review of your plan include:
1. Does every adult in your family have a will, power of attorney, and patient advocate agreement for health care? Is a copy of the patient advocate agreement on file with your doctor?
2. Are all assets in the name of your trust, or at a minimum, a payable-on-death account? Do you have a recorded deed showing all your real estate in the name of your trust? I suggest that you have a current informational title policy in your file to guarantee just that. Do you know that holding assets in joint ownership may subject survivors to unnecessary capital gains tax, claims of creditors, and improper distribution? If you and/or your spouse rely only on a will to distribute your property, your estate will be probated!
3. If you have a trust and minor children, should the guardian and trustee be the same person? Are special needs children or spend-thrift beneficiaries properly addressed?
4. Should you change the age or the manner in which a beneficiary receives a distribution (installments, income only vs. lump sum) in order to protect the inheritance?
5. Do you want to add or remove someone named in your documents (guardian, trustee, beneficiary) due to relocation, death, remarriage, divorce, or birth? Or, add a grandchildren’s trust?
6. To avoid probate, have you properly listed your assets and changed the beneficiary [or in many cases alternate beneficiary] of your insurance, annuities, IRAs, and pension benefits to your revocable living trust? Recent IRS changes on IRA beneficiary designations may affect your estate planning strategy. Educational trust rules have also changed for children and grandchildren. Should your spouse, trust, or charity be the beneficiary of your IRA?
7. Does the value of your estate (face amount of life insurance, equity in the home, IRA/qualified plan, investments) exceed $2,000,000? If so, there may be a big tax on your beneficiaries. Do you know how close your taxable income is to the lower tax bracket? Proper planning can save you substantial money on your tax bill!
8. Did you fund the maximum contribution [at least $4,000 or more in certain plans up to 25% of income] this year to your IRA, Roth IRA, SEP IRA, or College 529? If not, you missed out!
9. Have you recently reviewed current tax strategies (gifts, education trust funding, family partnership, charitable giving) to make sure that any estate tax (rates to 55%) is minimized or eliminated? Have you shared with your spouse all estate planning documents? This is critical. Have you performed a life insurance audit every five years?
10. If you own a business, do have a buy-sell agreement? This protects you and your family in the event you or your co-owner dies, is disabled, or retires. Have you created a corporation to protect your assets and provide certain other key person benefits? Are the stock certificates in the name of the trust? Placing certain assets in a separate entity insulates you from liability.
11. Do you want to pay taxes on your IRA now at 15% and have your beneficiaries get the asset tax-free? Otherwise, your beneficiaries might pay taxes on your IRA at a higher rate.
It is important to schedule an appointment to review your situation. There is no charge for the initial meeting.