Rethinking Your Estate Plan

Rethinking Your Estate Plan

The recently passed estate tax law makes estate planning easier for a lot of people, however a lot of retirees are using the new law as an excuse to take estate planning off their to-do lists. This is a big mistake.

Estate planning is crucial, maybe even more so with the new law. The recent sharp increase in the federal exemption may mean that old wills, trusts and estate plans may no longer be valid, or could at least use an upgrade.

Use this new law as inspiration to revisit your estate plan. Use these tips to help you rethink your plan for the better:

  • Where Is It? – Many people go to great lengths to plan and establish a wonderful plan for their estate, and then their loved one’s can’t find it once their gone. Keeping track of your estate planning paperwork and documents is crucial. Where is yours now? Does your spouse or other family know where it is?
  • Details, Details, Details – If your spouse or family can find your estate plan or will, it won’t do them any good if its missing important details or they don’t have the information they need to implement the plan. Eliminate the risk of this issue by doing two things. First, pay attention to the details, and double check every single one. Second, write a letter or have a conversation with your family to serve as a guide to your estate plan. Detail how the plan works, where the important documents are, and list important contact information for bankers, advisors, lawyers and insurance brokers.
  • Investigate Non-Grantor Trusts – If you’re charitably inclined, a non-grantor trust may be a major money saver. With the new tax law, the standard deduction went up to $12,000 for an individual, so you might not get any tax benefits for charitable donations with your current plan. If you transfer your investments to a non-grantor trust and name your charities and family members and beneficiaries, the trust could pay out significant funds to both and give you a dollar-for-dollar tax deduction.
  • Update Durable Power Of Attorney – Most people have a durable power of attorney in their current will or estate plan, giving someone power to make financial gifts to avoid estate taxes. However, the new law makes these power of attorney broad gift provisions very risky. If you still want your agent to have gifting powers, consider putting in restrictions to better protect your finances.
  • A Work In Progress – While it may feel like an estate plan is something you can do and be done with, it’s never really finished until your death. You should keep revisiting and rethinking your estate plan at least every few years because things change. Whether your net worth goes up, your kids get married, or your just change your mind; your plan should reflect your current situation.

Want to learn more about the new law and how it will affect your finances? Check out the IRS website. Don’t forget, you can also always get help with your estate planning by hiring an estate planner. Find a certified planner on sites like NICEP.org and Thumbtack.com.

How have you rethought your estate plan recently? Share in the comments. Looking for more financial help or tips? Read some of our other articles.

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