As 2020 comes to a close, we may be impatient to move beyond this year. It has been an especially difficult and uncertain year, and we may be eager to let go of it and look ahead. These sentiments are understandable.
However, the year-end holidays are often a good time to complete or review your estate plan. We may have some time away from work to focus or find ourselves more reflective during the holidays. Take advantage of this unique time to move ahead with your planning goals. Without question, this year has been turbulent, but it has undoubtedly taught us the importance of a plan.
Here are 5 helpful tips for your planning as we approach 2021:
- Take stock of what you own. If an item is important to you and you want to ensure it is passed down correctly, include it in your inventory and indicate which recipients should get which assets. This includes property, financial accounts, annuities, retirement benefits and insurance plans, as well as personal effects of value, such as jewelry, collectibles, etc.
- Complete or review your estate plan: Have you been putting off completing your estate plan? The holidays are a perfect time to have discussions with family regarding your plan, finalize the details of who will serve in key roles, decide upon beneficiaries and set your plan in motion. When circumstances change in your life, you should review your plan to ensure it reflects these changes. As a rule of thumb, aim to review your plan whenever you experience a major life event such as marriage, welcoming a child or grandchild, etc. or at least every 5 years, whichever comes first. As you are reflecting on 2020, consider making or reviewing these important life decisions.
- Review your account ownership transfers: While your estate planning documents may not determine how accounts are transferred, they are an important piece of the puzzle. This includes joint owner or pay on death beneficiaries, the primary and contingent beneficiary on your life insurance and retirement plans, and online accounts. All accounts should be reviewed and accounted for in your estate planning documents.
- Discuss your incapacity documents with your family: You should have incapacity documents that designate an agent to make health care and financial decisions if you are unable to make decisions for yourself. Make sure to discuss your wishes with your loved ones and keep these documents in a safe place. Do not forget to let your loved ones know where to find these documents and provide copies to your agent(s), bank and healthcare team.
- Make charitable gifts and reduce or eliminate your taxes: Do you think you have waited too long to make your charitable gifts? There is a good chance that you have not. There is still time to make gifts this year to many worthwhile charities helping those in need. And you may minimize or eliminate your estate taxes in doing so.