Fall Estate Plan Check-Up

Fall Estate Plan Check-Up

As we rapidly enter the Fall season, I thought it would be a good time to check back in and discuss a few estate planning concepts.

With the election season upon us, there is continued talk of what tax laws may change, and how that may affect estate planning. As always, I will keep up on any changes that could affect your plan and keep in touch with you.

Understand Your Estate: One issue I am seeing is that some folks I meet with don’t understand how their estate would actually work when they die. They think everything will pass based on the instructions written in the Last Will and Testament (“will”), but that is not always the case. If you have accounts that are jointly held with another person, those accounts go directly to that person, not through your will. If you have accounts with designated beneficiaries, those accounts bypass the will and go directly to the beneficiaries.

As an example, suppose that Joe and Sue have three children. Joe passes away and leaves everything to Sue. Sue’s will lists her three children as equal beneficiaries. But Sue puts her checking and investment accounts in joint names with her son Bill.  These accounts comprise of all of her liquid assets, which amounts to 35% of her estate (other assets include real estate and retirement accounts). Sue added Bill to the account because he’s the helper and would take care of anything if she became ill. However, she has no intention of Bill getting more than the other two kids. When she passes, Bill automatically inherits the liquid assets, and the other two kids are cut out of a significant part of the estate. This was not Sue’s intention, and it has created a significant strain in family relations.

The above scenario is unfortunately fairly common. The intent was correct, but the solution was wrong. The intent was to make sure someone can access accounts upon incapacity. The correct solution is to simply keep the account in your name, and designate a trusted agent as the Power of Attorney in case something happens to you. If you become ill, your agent can use the Power of Attorney to pay bills and do anything else needed, without becoming a joint owner of the account.

If you are not sure your estate really works the way you want it to work, it’s time for a checkup.

Don’t Forget Powers of Attorney: The story above illustrates the importance of actually having valid, well-written Powers of attorney. They are equally as important as having a will and sometimes, more important! Powers of Attorney are designed so that a trusted person can take over for you if you are incapacitated and cannot take care of yourself or make decisions for yourself. If you don’t have Powers of Attorney, it is possible that a court would need to appoint a Guardian on your behalf. The Guardian selection is ultimately up to the court. Having a Power of Attorney allows you to select who you want involved, and what powers they will have. If you have a very old Power of Attorney or none at all, please contact me immediately at 215-706-0200.


SECURE Act: At the beginning of this year, which seems like an eternity ago, the SECURE Act was signed into law. The SECURE Act changed several items in regards to retirement accounts, one of which was to limit the ability for most beneficiaries to “stretch” the account out over their lifetime. The lifetime stretch was an excellent way to defer taxes while allowing the account to grow. Some called it a pension for life for your kids or grandkids. If you created an IRA or Retirement Trust, and have not yet reviewed it with me, now is the time. Because the law has changed, the reality of your goals and the language in the trust may need to change.