Think of the New Year as an annual reminder to update your estate plan – even if all you do is make a list of the things you mean to do in 2016. A recent article in The Business Investor's Daily, "5 Changes to Make to Your Financial Plan Now," provides a framework to get things rolling.
Make gifts to family. Giving gifts of cash or tangible property worth up to $14,000 per person may be a good addition to your estate plan since there's no limit on how many gifts you can make, and no gift or estate tax. Couples can combine their gift giving to $28,000 per person. This is an easy way to reduce a potentially taxable estate. Speak with your estate planning attorney to establish a long-term strategy and give annual gifts to your beneficiaries.
Give to charity. You can also make a donation to a charity, and if you tend to make significant charitable donations, consider establishing a family foundation. To avoid capital gains tax, you may be able to donate appreciated assets like stocks. A donor-advised fund is another way to receive a charitable deduction today, avoid capital gains tax, and retain the authority to determine its future use. When creating any legal entity, make sure you work with an experienced estate planning attorney.
Check your beneficiaries. This applies not just to your personal estate plan but also to the benefits you have from your employment, like life insurance and retirement assets. It’s a little-known fact that beneficiary designations and the name on your assets are actually what determine if your family will go through the probate process after your death. Working with an estate planning attorney to ensure your assets have the right beneficiary designations and are named (or “titled”) correctly may be the difference between a lengthy, costly, and public probate process or a much more private process for your family.
Set up a meeting to review and update your estate plan. Now's the time to schedule a meeting with your estate planning attorney to create or update your plan. Regularly reviewing your plan with your attorney keeps the plan up to date with your life, your family situation, and the law. Take some time this year to make sure your plan will work the way you want it to.
Apply for Social Security and set up life insurance. If you are or will be 62 before the end of 2016, apply for your Social Security benefits. The latest federal budget bill took direct aim at and eliminated a Social Security claiming strategy, so this is a "sooner rather than later" task. And don't forget to update or buy life insurance. Life insurance can be a valuable estate planning tool, but make sure you speak with your estate planning attorney so it can be used most effectively in your estate plan.
2016 is a brand new year! Consider creating or updating your estate plan this year. If you would like to do so, contact us to schedule a consultation today!
Reference: Business Investor's Daily (December 18, 2015) "5 Changes to Make to Your Financial Plan Now"