Whether you own a little or a lot, the last thing you want to do to your loved ones is leave a mess of paperwork and inaccessible online accounts if you become temporarily ill, incapacitated, or when you pass away. Without any estate planning, heirs may lose life insurance payouts, tax deduction advantages, or even miss accounts they did not know existed which will go to the state’s unclaimed property department. Also, you may have heard that Congress is debating major changes to estate tax and gift tax laws. This “reconciliation bill,” known as “The Build Back Better Act” (BBBA) could make major changes that impact estate planning, including, but not limited to, huge policy changes in gift, tax, capital gains, and even surtaxes.
If you have not already, it is important to review your estate plans to ensure your estate planning will work the way you want, especially with the potential end-of-the-year changes from the BBBA, which only needs a simple majority to pass. In addition, you may want to consider contacting your financial advisor or accountant to take advantage of tax planning, and the window of opportunity to make gifts before the end of the year if you have not already exhausted your exemption amounts, and/or make contributions to your IRA, or other retirement account funds while you still have time.
For example, this year you can still gift up to $11.7 million without incurring any inheritance tax, and the assets would be removed from your taxable estate. Those with Trust-based estate plans may opt for creating new Trusts, or modifying existing Trusts through an amendment or restatement while it is still possible to do so to update your estate planning. Similarly, those considering business succession planning of a family business may want to consider that transition sooner than later. In addition, wouldn’t you prefer to receive the medical treatment plan you prefer — or decline a health care treatment plan — in a Living Will rather than someone else guessing what you would want, or worse, placing their judgment over yours?
In the meantime, here is an estate planning checklist to guide you through the eight (8) must-have estate planning documents before life circumstances get the best of you to decide what will happen to what you own and your body.
-
A Will:
Explain your final wishes by naming an executor to carry out your final wishes as a fiduciary, specify which heirs will receive assets from your estate, and select a guardian for any minor children you may have through the Court process called Probate.
-
A Trust:
Customize a legal agreement between you (settlor, grantor, or trust maker), the manager of your assets (trustee) and those who benefit from the trust (beneficiaries). Place your assets into the trust (fund your Trust). Trusts are revocable (can be easily changed) or irrevocable (cannot be easily changed) go into effect during your lifetime versus a Will which takes effect upon death. In addition, Trusts usually avoid the costs and fees associated with the long and often drawn-out process of Probate Court.
-
Power of Attorney:
Sign (execute) a legal document naming someone you trust to make key decisions on your behalf about your finances and/or health care. This document is essential, especially if you do not have a Living Trust, should you become incapacitated because of an accident, illness, or in a medically induced coma due to Covid or other conditions, because it allows a person to manage your assets when you are unable to do so under circumstances that you specify including temporary incapacity.
-
Final Disposition:
Share with your loved ones your preferences for burial or cremation, organ donation, pet care, and who should be notified when you pass away – or at best, make pre-arrangements to avoid other stressful decisions by your family and friends during an already unfortunately overwhelming time.
-
Important Legal Paperwork List:
Find critical documents, make copies, and secure same such as birth certificates, social security cards, medical care insurance documentation, passports, marriage certificates, income tax documents, life insurance policies, beneficiary designation forms, divorce certificates, other legal orders, business contracts, business incorporation documentation, and/or immigration papers. Having these documents, originals preferred, can save time in the probate process.
-
Financial Account List:
Inventory your financial affairs (i.e., checking, savings, money markets, certificates of deposit (CDs), investments, annuity, retirement, pension, brokerage, etc.), and any debts, loans, lines of credit, any automatic payments, and credit card accounts. In this way, should anything unfortunate occur, a trusted family member or friend can manage your accounts if you cannot for whatever reason – even temporarily.
-
Digital Account List:
Software is convenient and useful in keeping track of your digital assets (bank accounts, employment benefits, retirement accounts, and health insurance portal), however, because a change of service terms can make this difficult due to privacy and password protections (those dreaded security questions and answers). Instead, keep important images or messages backed up and saved in a place where your loved ones can access them (and know where to find them).
-
Residential paperwork:
Locate and secure all documents related to every real estate property that you own or lease – deed or lease documents, title insurance, homeowners or renters’ insurance, tax payment history, etc. Taking one (1) hour to assemble this documentation will save an incredible amount of time and money in the long run.
Contact Us
If you have any questions about these important estate planning documents, or the planning process for your loved ones’ financial security once you are gone, contact General Counsel, P.C., a law firm with expert estate planners providing advice regarding Last Will & Testaments, Revocable Living Trusts and Irrevocable trusts (i.e., Special Needs, GRATs, GRITs, etc.), and Estate Administration advice, as well as, Legal Business Contingency Planning, and Business Succession Planning.
Should you wish to discuss how the proposed tax law changes could impact future estate planning, or review your existing estate plan, please contact Ann-Marie Murzin, (571) 396-8460, amurzin@gcpc.com, to schedule a consultation.