Estate Planning: What you should be considering now

Estate planning means much more than trying to avoid a possible federal estate tax.

True estate planning means you have properly put in place a set of documents (a plan) that says how and to whom your assets will go when you die, as well as how they will be managed if you become incapacitated.

The current Republican legislative proposal calls for the elimination of the Federal Estate Tax. It is critical to note that if the Federal estate tax is repealed, it will most likely only be temporary, for up to 10 years. Due to the rules of the Senate, it is unlikely that the tax reform legislation will be permanent and many of the provisions, if passed, would expire in 10 years.

Thus, even if the estate tax is repealed, estate tax laws have changed frequently over past decades and an estate tax could be enacted again in the future. Your estate plan documents should be flexible and represent your desires, whether you are subject to an estate tax or not.

As good estate planning encompasses many more issues than estate tax reduction or avoidance, you should review or work on your estate plan even if the estate tax is repealed.

We view our roles as financial advisors very broadly. We are much more than just investment advisors. We have extensive experience in helping clients clarify their goals, simplifying the estate planning process and providing creative solutions. If dealing with these issues is difficult or you would like our assistance, please talk to us.

There are some of the topics you should consider in reviewing or drafting your estate plan:

  • Do you have the proper supporting documents in place and are they current?
    • These should include Powers of Attorney, Health Care Powers of Attorney and Advanced Medical Directives. If you are married, each spouse needs their own documents.
    • You should have a Revocable Trust in place, to avoid probate. Then it is important that you have funded the Revocable Trust, which means that your various assets are titled in the Trust name, not in your personal name.
  • Who are your Trustees or Executors when you die or if you become incapacitated?
    • Are they age appropriate and younger than you, to be able to effectively manage your affairs for many years in the future?
    • Have you named successor Trustees, beyond the initial Trustee(s) or Executor(s)? We do not recommend naming banks in these roles, except for special situations.
    • We have seen a number of times when the people named for these positions made sense when the documents were originally drafted, but later need to be changed. Check these.
  • Are you comfortable with when and how assets may be available to the next generations, depending on their ages and level of maturity?
    • Particularly if you have significant assets, think through the numbers. We can walk through this exercise with you.
    • For example, if you have $6 million and after you (and your spouse) die, and you have 3 children, are they able to handle receiving $2 million each?
      • Should the children get all of the money in one lump sum, even if they are adults? We recommend spreading the distributions out over a period of time, for almost all situations, unless the beneficiaries already have shown good responsibility handling significant sums of money.
        • Your documents could specify distributions in multiple stages over a number of years. If they are older than the last age specified when they would actually begin to receive the funds, a second provision could state: at the time of your death and then 2 and 5 years later, as an override.
    • We strongly recommend that assets going to the next generation should be given in the form of trusts, not to the beneficiaries outright, especially if the beneficiaries could be receiving $500,000 or more. This is vital in case of a future divorce by your children or beneficiaries.
  • If you desire to leave assets to a charity, and you have significant assets, we generally recommend making these charitable bequests from an IRA or retirement plan. This will be a huge tax savings to your heirs. These need to be done through the beneficiary designation form for that account, not through an estate plan document an attorney drafts.
  • As Alzheimer’s and dementia are becoming more common issues, we recommend that you review the provisions for how your financial matters would be handled if you were unable to manage your own affairs.
    • Traditionally, most estate plan discussions and documents focus on what happens after you or your spouse die. With Alzheimer’s, you may be alive for many years, but require the assistance of others to manage your finances. Thus, durable power of attorney designations and similar documents are vital.
    • Review your designations for this responsibility. Unlike estate Trustees who may have a only short period of responsibility, a successor during your lifetime may provide services and deal with issues for years or decades. 
    • If you are diagnosed with Alzheimer’s, Dementia or Parkinson’s, it is wise to meet with an Attorney who specializes or is knowledgeable about these issues in the early stages to make sure all your documents are in order as your significant other or guardian will be responsible for your care, finances and legal documents.
  • Do you want to add specific provisions for grandchildren in your estate documents? This has been a very meaningful topic we have discussed and seen implemented with a number of clients. They are providing these gifts, in addition to leaving funds to their children.
  • Is your life insurance adequate? Do you have older policies which should be reviewed? Do you have significant cash value or do your policies mature before age 100?
  • If your children are minors, have you designated guardians for them? If this was done a number of years ago, do you still agree on the guardians?
  • If a relative died recently, you should check to see if any of your estate plan documents need to be changed as a result. Your beneficiary designations? Your trustees or successors? Guardians?
  • If something happened to you, do your immediate family members know the passwords to your financial accounts, such as your credit cards, banks and other institutions? See my blog post on this matter, Emergency Planning.


This week’s takeaway: Estate planning has traditionally focused on avoiding estate taxes. With recent tax changes and others proposed, you should review and focus your estate planning and related documents on practical matters. Time spent on these issues could be very beneficial to your and your family members. We are here to help you.

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