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Apr 26, 201812:53 PMExit Stage Right

with Martha Sullivan

Estate planning doesn’t go away because of new tax law

(page 1 of 2)

The new tax law passed by Congress raises the threshold for taxable estates to $11.18 million for an individual. If you’re married, the threshold may double to as much as $22.36 million. This means that for the vast majority of Americans, for now, we don’t have to think about how to mitigate our estate tax exposure.

Does that mean you don’t have to do estate planning? Um, no, nice try. It’s still vitally important to have your affairs in order and consider the many important elements of estate planning. (Plus, the law can change again sometime down the road.)

This was brought home to me recently in a profound way. A former co-worker and his wife were in their late 50s/early 60s, both working full-time plus operating a small side-business together. Two of their three kids are college age and the last child is a senior in high school. In October, his spouse passed away unexpectedly in her sleep. In March, he followed the love of his life, also passing away in his sleep. The family’s circle of friends is rallying around these young adults who face a pile of adult matters to deal with on top of their devastating grief. It’s doubtful that, given their relatively young midlife ages, these wonderful parents had updated estate plans to guide their kids through all this.

Consider just how important it is to these kids to know how their parents wanted things to be handled when the time came. While focused largely on financial elements, their estate plan should have included how to manage their personal affairs and communicated their wishes.

The reality is that our own demise is a new beginning for our loved ones. When our door closes, a new chapter and phase in their lives begins. The estate plan is our last gift to them to help them launch into this new phase. What state is your plan in? Where are you at in your own planning process?

Simply stated, your process should:

  1. Document what you own and owe: Build an inventory of your assets and obligations. It’s the first critical step in estate planning. Include all the pertinent contact information, including account information. If an asset, such as a 401(k) account, has a standalone beneficiary designation associated with it, ensure that the named beneficiaries remain appropriate. Update the list on a regular basis.
  2. Name your guardian angels: Identify individuals who you wish to empower as fiduciaries over your affairs, guardians of your children, executor of your estate, trustees of accounts, and powers of attorneys.
  3. Protect your loved ones: If you have minor children, outline who should care for them if you and their other parent are not able to do so. If there are loved ones with special needs, consider strategies to provide for their care, regardless of their age. Review your life insurance policies and the related beneficiary designations.
  4. Plan for the unexpected: Consider how you want to be cared for if you were to become incapacitated for either a short time or longer. Document where and who should care for you and what alternatives should be considered. Inventory the health, long-term care, and disability policies that you have, including contact information. Execute powers of attorney for health care and financial decisions. Prepare a living will outlining your end-of-life medical wishes and priorities.
  5. Document and communicate your wishes: Give careful thought to how you want your net assets distributed. Review your beneficiary designations and update them if needed. Does a last will and testament or a living trust better meet your needs for protecting and distributing your assets? Complete the appropriate legal document. Make sure trusted souls (beyond just your spouse) know where to look for the direction and documents. Set a reminder to review and update them annually, at the time of major life events and when tax laws change.
  6. Protect your assets: Assemble your team of advisors. Share all the information and decisions you’ve made in the prior steps with them. Work with your accountant and wealth advisor to understand strategies to minimize estate taxes. Talk to your insurance agent to ensure you are adequately protected. Hire an estate attorney to help you draw up all the appropriate documents.


Aug 30, 2018 12:42 pm
 Posted by  BillY

Sounds Advice. I can't stress enough the importance of beneficiary designations and updating them. Create a spreadsheet or other document where you have a list of all of your accounts. It's a good idea to get into a habit of reviewing your designations at least once a year. This is usually the time when you'll get a notice or a reminder about updating your information.

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About This Blog

Spending half her career as an advisor to privately-held and family businesses and the other half in CFO/COO roles, Martha Sullivan is a partner and the succession planning practice leader in the business transition strategies group at Honkamp, Krueger & Co., P.C. She and her team have extensive experience assisting business owners achieve their personal, business, and transition goals. “Don’t think of the 'exit' from your business like it’s a four-letter word. Make it your next adventure!”



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