2017 Year-End Estate Planning Checklist
December 19, 2017
As the end of the year approaches and with the holiday season in full swing, estate planning isn’t typically at the top of most people’s wish lists. Nevertheless, it is important not to move on to 2018 new year’s resolutions without tying up the loose ends from the previous 12 months. For many of us, this includes updating our estate plans. The following is a year-end checklist to help you get your estate planning ducks in a row.
Was 2017 a life changing year for you and your family? Marriage, divorce, remarriage, the birth of a child, death or disability of a family member, or moving to another state are all life changes that may trigger the need to reexamine and update your estate plan.
Complete the Funding of your Trust
An old adage states that your trust is only as good as its’ funding. Did you acquire new assets in 2017? Did you sell or buy real estate? Make sure your assets, including real estate, bank accounts, brokerage accounts, stocks, and business interests are retitled to the name of your trust. Failing to properly fund your trust could result in a potentially costly probate and/or negative tax consequences.
Personal Representative/Successor Trustees/Power of Attorney/Health Care Agents/ Guardians
Make sure the individuals nominated in your estate plan, including personal representatives, successor trustees, attorneys-in-fact, health care agents, and guardians for minor children are up to date and in line with your current wishes. Oftentimes, people forget to update these nominations, even as relationships change, parents get older, and family or friends move away. As we approach the busy holiday season, it is important to make sure these nominations reflect your current circumstances.
Review and update beneficiary designations for brokerage accounts, retirement accounts, and life insurance policies to ensure they reflect your current situation. (Tip: if you get divorced or if you plan to disinherit a child, make sure you update your beneficiary designations to reflect your change of heart.)
Congress is on the verge of passing sweeping tax reform, including the potential repeal of the federal estate tax. Currently the House and the Senate have introduced versions of the bill that differ greatly on a number of key issues. With so many questions still up in the air, it is important that your estate plan is crafted with flexibility to navigate both current and future tax provisions.
The annual federal gift tax exclusion for 2017 is capped at $14,000 for individuals and $28,000 for married couples. The cap is the maximum amount for gifts that can be made to an unlimited number of individuals without triggering any gift or generation-skipping transfer tax. Making annual gifts is a great way to transfer wealth to future generations and to remove excess assets from your estate. Checks for gifts must be cashed or deposited on or before December 31, 2017.
Consider Charitable Giving
What better time of year to make charitable gifts than the holiday season? Make contributions to qualified charities on or before December 31, 2017, if you want to deduct your donations on your 2017 tax returns. Note: taxpayers who are 70-1/2 or older are able to transfer up to $100,000 from an IRA directly to a qualifying charity (a charitable rollover) in partial or full satisfaction of their required minimum distribution for 2017.
Have the Estate Planning Conversation with Your Family
With families scattered across the country or even across the world, the holidays may be your family’s best shot at addressing important issues like estate planning. While talking about death, health care decisions, and tax planning may not be at the top of your holiday wish list, it is important that your loved ones understand your estate plan. For parents, discussing your retirement plans, long-term financial outlook, health care wishes, and end of life planning with your children will help them understand your wishes and will prepare them with a road map for handling difficult decisions. Parents should also inform their adult children as to their selections for personal representative, successor trustees, power of attorney, and health care agents. It is equally as important for adult children to raise the estate planning conversation with aging parents to make sure parents’ estate plans are in order and to help shoulder some of the administrative load. When it comes to estate planning, keeping open lines of communication amongst family members is key to avoiding confusion, family conflict, and avoidable pitfalls including probate and tax consequences.