The best way to address concerns raised by assets in the electronic age from an…
Estate Planning New Year’s Resolutions
Review and Revise Your Estate Plan
If you have already established a will, you should be aware that the laws that govern estate planning (such as power of attorney rules, Medicaid regulations, and estate and gift tax laws) change frequently. Additionally, it is very possible that your personal and financial circumstances have changed since your estate plan was created. All of these changes could have a serious effect on the outcome of your estate plan. To account for these changes (especially the impending change in federal estate tax law), you should have your will reviewed and revised by an attorney familiar with estate planning.
Plan for the Distribution of Tangible Personal Property
While most people creating an estate plan do a good job of accounting for and distributing financial assets, a plan for the distribution of tangible personal property (jewelry, collections, furnishings, etc.) is often neglected. Tangible personal property is often viewed as less valuable, but this belief does not account for the sentimental value of these objects to the family members of the deceased. Because of this, estate planners frequently see disputes among siblings about the division of these assets after death. Providing clear and detailed instructions for the distribution of such personal property can help avoid conflict between your loved ones in the future.
Review and Consider Power of Attorney
When considering estate planning it is important to plan for all possibilities, including the possibility of incapacitation. There are several different types of powers of attorney, and not each one may be right for you. Consult with an attorney about your options in designating power of attorney, writing a living will, and establishing a healthcare proxy.
Transfer your Life Insurance Policy to a Trust
If you own your life insurance policy, it may be subject to the estate tax upon your death. However, if you use an irrevocable trust to purchase your life insurance policy, it will be shielded from both estate and income taxes. If you have already purchased life insurance, it is possible to transfer ownership to a trust and achieve the same benefits.
Invest in a 529 Plan
College is very expensive, but Internal Revenue Code section 529 provides an excellent way to invest in a fund designated to pay for higher education expenses. Establishing a 529 education savings plan allows the investor to “frontload” up to five years worth of annual exclusion gifts to one person, or $65,000 in 2010. Though funding higher education is always an exemption to the gift tax, using this plan will allow interest to accrue free from income tax, making investments in 529 plans very effective.