From Our Blog:

6 To Do’s When Estate Planning

The reality of COVID-19 is forcing us to face those “what if” situations most are reluctant to think about, let alone plan for. Estate planning, while it can be a difficult topic, is one that needs to be dealt with in order to leave your loved ones in a constructive space upon your incapacitation or demise. Estate planning is an expansive topic, but we are going to focus on a few steps to start a basic estate plan.

1. Take inventory

Take time to think through where all your assets and accounts are held. Remember the tangible assets (house, vehicles, collectibles, etc.) and the intangible assets (bank accounts, retirement plans, HSA, etc.)

You can use our Financial Inventory Checklist to help guide you through the inventory process.

2. Think about your family

What will happen to your family in the case of your death or incapacitation? Things to think about are:

  • Life Insurance: lump sum paid to beneficiaries designed to cover expenses such as the funeral, mortgage, and to maintain current lifestyle.
  • Name a guardian for your children: the person who will take care of your children. Make sure this person will abide by your child rearing ideas and goals.

3. Review your beneficiaries 

Make sure the right people get the right stuff. Oftentimes you established beneficiaries many years ago and probably never updated them. Beneficiaries named on retirement plans or insurance products usually supersede what is stated in a will. Therefore, if you never update your records, your assets may end up somewhere you do not desire anymore. For example, if you neglect to update your beneficiary information after a divorce, your ex could inherit the assets.

4. Establish your directives

These are legal directives to help manage your affairs and estate upon your incapacitation or demise.

  • Medical directive: spells out your wishes for medical care if you become unable to make those decisions yourself. You can also grant medical power of attorney for your health care giving that person the authority to make decisions if you are unable to.
  • Durable financial power of attorney: gives someone the power to manage your financial affairs if you’re medically unable to do so.
  • Limited power of attorney: can be used when you want to limit the powers of your named representative to specific activities.
  • Trust: a living trust allows you to designate portions of your estate to go toward certain things while you’re alive. If you become ill or incapacitated, your selected trustee can take over. Upon your death, the trust assets transfer to your designated beneficiaries, bypassing probate.

Be sure to thoroughly think through who you are naming to these positions, as they can have your financial well-being and life in their hands. 

5. Take note of your state’s estate tax laws

At the Federal level, estates up to $11.4 million are exempt from federal taxation. Some states have estate taxes (check your states estate tax laws here). Also, some states have inheritance taxes. Note: Maryland is the only state which has both an estate and inheritance tax.

6. Plan to reassess

Life changes and so should your estate plan. Revisit your estate plan when circumstances change for better or worse. Revisit even if your circumstances haven’t changed. The need to revisit means you have already avoided the biggest mistake of estate planning – not doing it at all.

How We Can Help

Estate planning can be a daunting task, but taking the time to do so will be a relief to not only you, but your family members. We are here to help in the good times and the bad. Please contact us today with any questions.

Additionally, through our integrated service offerings with Gross Mendelsohn, their estate planning professionals that can help you navigate the implications of estate planning. Download their free estate planning scorecard.

Receive your Financial Inventory Workbook today!

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