As you read this, your mind may be filled with visions of sugarplums as they dance in your head ... instead of your estate plan (or lack thereof). Alas, I am here to bring you some good cheer - there is always next year.
But do not tarry, my good lad or lass.
This most timely topic was the theme of a recent article in the Pittsburgh Post Gazette titled "Holiday season is the best time to update your estate planning."
What assets do you have that are subject to having a beneficiary (or more) designated to inherit them (think life insurance, IRAs, 401ks, etc.)? Do you want the same beneficiaries on all of these? If not, plan to change them.
Do you have contingent beneficiaries, if the first beneficiary predeceases you? If the answer is no, you could pay significant taxes for your IRA, for example. Some of the money will go to income taxes because the funds are going to your estate instead of being able to "stretch" out the distributions over the life expectancy of the beneficiary.
Have you sat down with an estate planning attorney to create your estate planning documents? If yes, then consider reviewing them before the family gatherings and make any changes needed. On the other hand, many of my clients change their estate plans after the holiday gatherings, especially if they have only just begun to wear hearing aides!
Who is going to handle your affairs if you are incapacitated or when you pass away? Designate the individuals you trust to take care of your affairs before they are needed, and make sure they will agree to do it. While you are at it, make sure your family members know your wishes for health care decisions and end-of-life choices.
Do the parties acting on your behalf know the location of your important documents, like power of attorney and health care directives? You do not need to give out copies of these documents, but let someone know where they can find them.
Last but not least—before the year ends—are you able to make gifts of some of your assets to loved ones? If you are financially able, take advantage of the $14,000 annual exclusion from federal gift taxes to give that amount to as many people as you want. Yes, even your favorite estate planning attorney is an eligible beneficiary. Ha!
Make it a truly Happy New Year and get that estate plan together sooner rather than later.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Pittsburgh Post-Gazette (November 23, 2014) "Holiday season is the best time to update your estate planning"