- Lose weight.
- Exercise more.
- Appreciate the small things.
- Make more time for myself.
- Enjoy my friends and family.
Sound familiar? These are the resolutions that I usually have on my list. Some years I have more success, and some years less.
This year, I’d like to challenge everyone to add a new resolution—one that I think you can easily keep: Review or create an estate plan.
I know, I know … who likes to think about what happens after they’re not around? But with the estate tax laws generally untouched, it’s worth reminding that, regardless of your net worth, estate planning is important for everyone.
If you decide to accept my challenge, here are five things to keep in mind:
- Take out your will or revocable trust, dust if off, and review it with your advisor to make sure it’s still consistent with your wishes. The tax laws have changed dramatically over the last 10-plus years, and failing to review their impact could have unintended results. If you don’t have an estate plan, then here’s your chance to put one in place.
- Make sure you’re comfortable with your lawyer—not just with his or her technical skills but also with the fees and, more important, with how your lawyer relates to you. You should be comfortable disclosing your assets as well as your hopes, fears, and concerns for your loved ones. Without full disclosure, it will be difficult for any lawyer, or for that matter any other advisor, to be truly effective.
- Remember that it’s not just about federal estate taxes but also state estate taxes. There are still 19 states plus the District of Columbia that have some form of state estate or inheritance taxes. For many of these states, the exemption amounts are significantly lower than the federal levels, meaning that you may need to do additional planning.
- Don’t forget to ask your lawyer to review your beneficiary designations for all accounts and how your assets are titled. There are many different ways that assets pass to your loved ones. It’s important that your estate plan coordinates your will/revocable trust, titling of assets, and beneficiary designations.
- Carefully consider who will act on your behalf if you aren’t able to do so. Try not to let your sense of equality or not wanting to hurt someone’s feelings influence your decisions as to who will serve as your agent, surrogate healthcare decision maker, executor, and trustee. It’s important to make sure that the individuals you appoint are people you trust (first and foremost), that they know when and where to get help, and that they will carry out your wishes. Keep in mind one person doesn’t need to fill all roles. Some individuals may be appropriate for the financial-related roles; others may be better for the healthcare decisions.
I know that the thought of estate planning can be daunting, if not overwhelming, but it doesn’t have to be. Let your advisors help educate you and organize your thoughts so you can approach your estate planning in a more efficient and organized fashion. And, if you complete my challenge, I guarantee that you’ll have a little more peace of mind, or at least be free to focus on those other New Year’s resolutions!