Ten Things to Think About Before Creating Your Estate Plan

Haven’t given much thought to estate planning and charitable giving? You aren’t alone. Over 60% of people don’t have Last Wills and Testaments.  Here are 10 questions to jumpstart your thinking(thanks to Marketwatch for the great article):

1. Can you afford to give away money now? You shouldn’t gift large sums to your children or charity unless you’re confident you have enough for your own retirement. There’s no limit on gifts to charity, though your annual tax deduction may be capped. For gifts to family members, you might take advantage of the annual gift-tax exclusion, currently $15,000 as of January, 2018.

2. Do you have the right beneficiaries listed on your retirement accounts and life insurance? Your individual retirement account and employer’s retirement plan might hold the bulk of your savings, so it’s crucial these accounts pass to the correct people. Unless you want your ex-spouse inheriting from you, probably a good idea to remove his or her name from the beneficiary designation.

3. At the end of your life, who do you want to make medical decisions on your behalf and how far would you like doctors to go in attempting to prolong your life? You should make these wishes official in a health care power of attorney and physician’s directive.

4. Do you have a Last Will and Testament? According to a 2016 Gallup survey, just 44% of U.S. adults have one. Wills are crucial to avoid letting the State dictate who receives your property.

5. Are you worrying unnecessarily about federal estate taxes? Thanks to today’s $5.5 million estate tax exclusion, IRS statistics suggest just one out of every 530 deaths will likely trigger federal estate taxes. Indeed, you should review your estate plan if it was designed to avoid federal estate taxes—but was drawn up before the sharp increase in the federal estate tax exclusion since 2001, when the exclusion stood at just $675,000. If you have complicated bypass trust language, now is a great time to simplify your Estate plan. and make things easier on your surviving spouse or children.

6. Does your state impose an estate or inheritance tax? Good news . . . Texas has no state inheritance tax!

7. Should you keep your Roth IRA for your heirs? That pool of tax-free money could make a great bequest. During your lifetime, you might also help your children or other young family members fund a Roth, assuming they have earned income. With decades of compounding ahead of them, even small sums invested today could grow to become significant wealth.

8. Are the charities you support well-run? Investigate charities by heading to sites such as CharityNavigator.org and GuideStar.org. A crucial question: Of the dollars you donate, what percentage ends up in the hands of the people you’re hoping to help? Consider local charities if you have misgivings about national organizations.

9. Could you save even more on taxes by donating appreciated assets? And if you’re over age 70½, you could give away part of your annual required minimum distributions.

10. Have you talked to your adult children about your estate? You should discuss your estate plan with your family and how much they will likely inherit, how you would like the money used, where key documents are located and what your wishes are regarding life-prolonging medical procedures. Will contests and Trust litigations costs thousands and can permanently divide families. Be honest about what you are leaving to whom and why.

If you need help with your estate plan, give us a call at 817.638.9016. Be sure to sign up for our newsletter to receive even more valuable planning news and tips.

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