The State of Estate Planning

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. There is no such thing as status quo when it comes to laws, regulations and court decisions that impact different planning solutions. You cannot put a trust in place in 1995 and not look at it 25 years later. Your life will no doubt change dramatically during that time span, and the laws will definitely have shifted in that period of time.

What I’ve seen is that a lot of people have let their guard down when it comes to estate planning. Because federal estate tax concerns have largely disappeared (you have to have over $11 million per person / $22+ million as a married couple), a lot of folks have the impression that they are off the hook.

Now, I see a lot of haphazard, incomplete and ill-conceived estate plans that lend themselves to being disputed among relatives, with the worst cases going to court. I tend to find that the best plans are crafted by those who recently saw a loved one become ill, pass and their estate was not in the best shape. The client that walks through my door wants to ensure nothing bad happens to them, and they’re ready to plan because it’s fresh in their mind.

For those who don’t have a recent case to reference, it becomes more difficult to see the urgency in planning.

Federal estate taxes may be gone for most us, but the new challenge is planning for long-term care needs and costs. With nursing home costs skyrocketing, planning in advance is becoming more popular. Options include insurance, the use of a Medicaid Trust and other methods. This type of planning is extremely fact-specific, meaning the types of assets you have, your current health, age, legacy goals, etc., will factor into how we plan for you. But the worst thing you can do is ignore this potential disastrous issue.

No one wants to go into a nursing home. We want to stay independent forever, and cannot stand the thought of the alternative. Yet, what I constantly find is that there is an intersection between a positive legacy and taking the time to plan for long-term care needs. By engaging in long-term care planning, you have children and loved ones who are less likely to feel burdened in your time of need, which in turn leads to less conflict.

When I ask folks, “what do you want your legacy to be?” I usually get a few blank stares. Others say, “it is what it is.” For me, I want my legacy to be that I left my family in good shape—that they still get along after I’m long gone, that my hard-earned estate isn’t squandered by some senseless spending or other action. I want my family to still talk to one another when I’m gone.

Surely, an attorney helping you with an estate plan is not the only necessary step to ensure a positive legacy, but it’s one significant piece of the puzzle.

Sorry for the lengthy article as I try to piece together what I see as today’s landscape in estate planning. If I had to boil this down to one sentence, it’d be—see an estate planning attorney today to get your plan reviewed before it’s too late.