Client Memo – Estate Planning Suggestion

by | Nov 19, 2018 | Client Memo, Estate Planning

With the end of the year fast approaching, we would like to remind you that this is a good time to evaluate your estate planning needs and strategies and consider updating your estate planning documents.

Here are a few suggestions for you to consider:

  1. Please make sure that your will and trust documents are current and confirm that your directives to physicians and financial powers of attorney are still current and effective. It is important that you consider granting your children financial powers of attorney to be able to sign checks and agreements and be able to access your accounts if you are not able, and as you get older.
  2. Additionally, please be sure that you have a listing of all assets and important information, and that you have this in a location where your spouse or children can readily access it and have informed them where it is located. It should include the following:
  3. Retirement account bank and brokerage account numbers
  4. Bank and brokerage account numbers and contact information for your wealth advisor(s)
  5. Annuities
  6. Life insurance policies including the broker contact info and policy information
  7. Contact information for your trust and estate lawyer, and accountant
  8. Passwords to your computer and online access. (We strongly recommend the use of a password manager)
  9. A second signature should be authorized on your bank accounts and financial powers of attorney if the second signer is not your spouse.
  10. Copies of beneficiary designation forms for retirement plans
  11. Copies of any pledge agreements for testamentary gifts to charities
  12. Location and contents of all safe deposit boxes and keys
  13. If you have accounts outside the country make certain to advise family members and our firm.
  14. Consider making gifts for the benefit of your children and grandchildren and take advantage of the increased $11.4 million lifetime estate and gift tax exemption for 2019 through 2025. If you are married, your spouse is entitled to a separate $11.4 million exemption. After 2025 the exemption reverts to roughly 5.5 million dollars.
  15. Be sure to schedule out all personal property that you would like to gift your children; and include the schedule in your trust document or an addendum to it. This will eliminate confusion among your children.
  16. If you have grandchildren you should consider making separate gifts to them, which can be held in trusts or custodial accounts.
  17. Make sure you are making the allowable annual gift of $15,000 to each family member if able. Each spouse can gift $15,000.  If the gifts are to a trust you have established then make sure that Crummy letters are being signed.
  18. Further, please make sure that you have filled out a beneficiary designation form for all retirement plans. Generally speaking, your family trust should not be listed as a beneficiary, because it may prevent your heirs from deferring taxes on the amount inherited from your retirement accounts.
  19. If you are updating an estate plan retirement, insurance, or other beneficiary designations due to a change in marital status, please reach out to us as California law may have different consequences than intended.
  20. All assets you own should be in the name of your revocable family trust to ensure your assets will not be subject to an expensive and lengthy court probate proceeding. These assets include investments in partnerships, LLCs, and S corporations, deeds to real estate (including primary and secondary residence), insurance policies, retirement savings, and all bank and brokerage accounts. Your trust lawyer or our office can assist to ascertain that this is properly taken care of.
  21. Make sure that your will exercises any limited power of appointments granted to you under trusts in which you are the beneficiary if you would like your spouse to continue receiving income granted to you as a beneficiary.
  22. Keep in mind that to minimize estate taxes the best time to consider making gifts of assets that you don’t need for your income requirements is while you are alive and the earlier the better. There are a number of strategies we can recommend to you to accomplish this while protecting the assets in trust for the benefit of your family members.
  23. Consider converting your retirement accounts to Roth accounts to eliminate tax on the growth of the account.
  24. Consider paying tuition for your grandchildren. Tuition, if paid directly, and medical expenses can be paid and not counted as part of the annual exclusion gifts.  In addition, consider using 529 plans to pay for college tuition for family members.  All earnings are excluded from tax if used for qualified tuition expenses and you can prepay five years of annual gifts at once.

We encourage you to provide us with your year-end tax planning data. Start planning early helps to maximize available tax benefits. We would be happy to refer you to competent trust and estate counsel if you need someone to work with.

Disclaimer: The information contained in this publication is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. In no event will Fishman, Block + Diamond, or its partners, employees, or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this website or for any consequential, special, or similar damages, even if advised of the possibility of such damages.