Legacy Planning

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 work when they die. They think everything will pass based on the instructions written in the Will, but that is not always the case.

This year, estate planners around the country are dealing with the new SECURE Act that Congress passed and the President signed into law late last year. The SECURE Act went into effect on January 1 and makes several changes to retirement plans.

For clients hoping their children or loved ones would be able to “stretch” an inherited IRA out over his or her lifetime, the new law restricts the payout time to 10 years. Those who’ve added an extra layer of protection using an IRA Trust will have to consider modifying such a trust, while also considering new planning opportunities.

As I tell clients, estate planning laws change every few years.

Procrastination with estate planning is common, but nonetheless unfortunate. Without a proper estate plan, you risk family conflict, placing a burden on loved ones during a difficult time, and ultimately leaving less money for the people you want to provide for. Having an estate plan is like having an insurance policy—you hope you never need it, but when you do, it’s there for you.  I have heard many excuses for failure to plan during my years of practice and describe a few of my ‘favorites’ below.

There are lots of misconceptions about estate planning, and any one of them can result in costly mistakes. Understanding who needs an estate plan and what it should cover is key to creating a plan that is right for you and your family.

We have touched upon this previously, but it bears repeating.  A properly crafted estate plan allows you, while you are still living, to ensure that your property will go to the people you want, in the way you want, and when you want. It offers the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion.

We did a lunch & learn last week on IRA Trusts, something you newsletter readers have read about, courtesy of me, all too often. IRAs are potentially great assets to pass on, but only if structured properly. Unfortunately, there are many pitfalls with IRAs and inheritances.

One issue that comes up a lot, at these events and in meetings with my clients, is the desire to pass things along to heirs and beneficiaries, but the worry that comes along with that that the recipient will squander that gift.  Not too many people trust an heir, especially a young one, with a significant sum of money.