6-Step Estate Planning Checklist
Posted on: November 7th, 2016
By Mary Merrell Bailey, Esq. and Hallie Zobel, Esq.
As we enter the final quarter of 2016, we like to remind our clients, friends, and professional associates to pause and reflect on their goals (whether for themselves or for their clients) for the coming year. To facilitate that process, we have prioritized a checklist summarizing what we consider to be “Six Very Important Action Items.”
One of the most critical steps in the estate planning process is to properly fund a trust. We’ve made that task “No. 1” on our checklist because of the potentially devastating consequences if this step is overlooked. For those who recently created estate plans, this reminder is particularly relevant. As the Holidays approach, it’s easy to lose track of the tasks that are typically necessary to transfer title of assets into your trust.
We want your estate plan to succeed. Please contact us if you have any questions regarding our recommendations:
1. Fund Your Revocable Living Trust Immediately
The estate planning process is not over once the documents are signed and you leave the attorney’s office. A carefully crafted Revocable Living Trust is powerless until it has been properly funded.
What does “funding a trust” mean? In simplest terms, funding is the process of re-titling many of your assets (e.g. bank accounts, stocks, bonds, real estate, etc.), into the name of the trust. It also requires changing the beneficiary designation on certain assets by using the custom beneficiary designation language we provided as the primary or secondary beneficiary. In short, funding a trust is analogous to putting gas in your new car. Follow your Asset Action Plan™ discussed during your consultation to visualize which assets must be moved.
What are the consequences of not funding a trust? Without a properly funded trust, the trustee cannot manage or distribute the assets in the event the grantor dies or becomes incapacitated; the estate may have to be probated or be forced into guardianship proceedings; and assets may pass by contract or rights of survivorship to unintended beneficiaries. If that happens, the trust would have failed its original purpose.
2. Name a Guardian for Minor Children
Most parents would agree that their children are by far their most precious asset. Yet, many parents with young children fail to create an estate plan or name a guardian in the event a tragedy should strike. Why? Many parents simply are unaware of the consequences of not planning. Some parents assume their closest relatives will step in and accept responsibility should something happen. Amidst the grief and confusion that follows the death of parents, the Florida courts will decide who should raise minor children. And the judge’s decision may not be whom the parents or the children would have wanted. We also recommend parents name an alternate guardian in the event their first choice is unable to serve.
3. Decide Whether You Should Take Advantage of the Gift Tax Exclusion in 2016
If the value of the assets in your estate exceeds the current exemption of $5.45 million per individual ($10.9 million for married couples) one of the most effective ways of avoiding estate taxes is the annual gift exclusion. In 2016, you can give a $14,000 gift each year per person that won’t count toward the lifetime exemption. It’s important to be mindful that the presidential candidates differ substantially on their positions regarding the estate tax. While Donald Trump plans to eliminate the estate tax altogether, Hillary Clinton plans to lower the lifetime exemption to $3.5 million, increase the top estate tax rate to 65%, and limit the lifetime gift exclusion to $1 million. While no one can predict the future of the estate tax, we will be happy to meet with you to determine the best strategy for your current situation, and then make adjustments as the need arises.
4. Discuss Your Advance Directives with Loved Ones
Absent the proper documents, healthcare providers will rely on your family members to make end-of-life decisions for their loved ones. Families are often haunted by having made medical decisions without knowing their loved one’s wishes. They often carry guilt and anxiety for years as to whether or not they did the right thing. One of the most responsible and loving things we can do as adults, of any age, is to take control of the future, make these difficult decisions prior to becoming physically or mentally incapacitated, and communicate your wishes with your loved ones in clear and unambiguous language.
5. Ensure that Young Adult Family Members Have Basic Legal Documents
Once teens reach the age of majority (18 in most states), parents are no longer considered their legal representatives and are not entitled to see their medical and financial records or to make decisions for them. As older teens head off to college or otherwise leave home to pursue their own lives, they cross over the threshold into legal adult territory where all the rules have changed and parents have very little authority. All young adults over the age of 18 in Florida should have three essential legal documents: A durable power of attorney, a healthcare power of attorney, and a living will. We encourage clients and family members to download our free e-book, “18 And On Your Own: Legal Documents for Grads and Young Adults.”
6. Facilitate Access to your Digital Assets
At Your Caring Law Firm, we instruct our clients to have a process in place where at least one other person has access to, or knowledge of, the location of your logins and passwords. This includes access to any passwords associated with your bank, your health insurance, your address book, and digitally-stored copies of the estate plan. It’s important to be mindful that the purpose of engaging in estate planning is to ease the burden on loved ones left behind and minimize chaos in a crisis. That means providing immediate access to the appropriate information when the time comes.
From all of us at Your Caring Law Firm, we wish you a joyous Holiday Season and success in the new year. Feel free to contact our office at 407-622-1900 if we can assist you in achieving your estate planning goals.