Financial Tune Up- What to Look For When Reviewing Your Estate Plan

Our topic on this episode of the Ready for Retirement podcast is part four of the financial tune-up series: What to Look For When Reviewing My Estate Planning Documents.

Questions answered: What do I need to look for when reviewing my Estate Planning documents? What strategies can I implement to improve my financial future? What is the best approach for my individual situation? 

Are you ready to start focusing on the things that truly matter when it comes to your financial future?

What Issues Should I Consider When Reviewing My Estate Planning Documents?

Key Points

• Have you recently changed your residency?
  • Have you changed states since you put your estate plan in order?
    • New estate planning documents are required to make sure documents are valid.
  • Have any laws occurred since you put your estate plan in order?
    • Ensure new laws are reflected in your plan.
  • Do you know where your estate planning documents are?
    • Ensure documents are in a safe/accessible location and you keep a copy with a financial planner or trusted professional so they can easily access these documents.
• General Power of Attorney
  • Act on behalf of you for any and all matters.
    • A General Power of Attorney can act on behalf of you in terms of handling a bank account, filing taxes, handling checks, etc.
      • Are these powers effective immediately or contingent upon another factor?
    • Durable v. Non Durable Power of Attorney
      • Do they continue beyond your incapacity or any other factor?
• Review Appointed Agents
  • If you name multiple agents, review if they can act individually or they can act jointly.
    • Consider naming a general agent as a Power of Attorney rather than multiple.
      • Do you have successors in place in case your primary agent is unable to successfully uphold your wishes?
• Limited Power of Attorney
  • What do you want your Power of Attorney to do for you, and what don’t you want them to be able to do for you?
    • Consider a Limited Power of Attorney to ensure they can only control what you wish.
• Health Care Power of Attorney & Living Will
  • Health Care Power of Attorney is authorized to make decisions on your health.
    • This is often a spouse, sibling, or another loved one.
      • It may be best to have a local agent who is able to uphold your wishes.
        • If your spouse or sibling is not nearby and a tragic event occurs, you want to make sure paperwork is in order that allows a local agent to act on your behalf.
        • Ensure that the agent has the power to act individually, rather than jointly, depending on what you wish to be upheld.
  • Understand there can be inefficiencies if there’s joint decisions that are required as many decisions often need to be made quickly, abruptly, in the most efficient way possible.
  • Ensure there are successor agents in place.
• Health Care Power Attorney – HIPPA Authorization
  • Review to confirm HIPPA Authorization to ensure you’ve reviewed your end-of-life treatment options.
    • Make sure you have provisions in place to ensure artificial nutrition, vegetative state, before any potential tragic event.
    • Review your living will instructions to ensure everything is on file before then.
• Executor, Successor, Fiduciary, etc.
  • When you’re naming an Executor, make sure it is someone who is capable to serve and capable of fulfilling those responsibilities.
    • If you’re planning on naming co-fiduciaries, weigh the benefits against potential complications. 
• Will & Testament
  • Confirm estate plan has testamentary provision.
    • Do you want your minor children to have access to funds at certain times?
      • For example, you may have one child receive 30% of assets at age 35, another child to receive 50% of assets at age 25, etc.
    • Ensure one or more guardians are in place to take care of minor children.
• Should your Trustee be your Guardian?
  • A division of responsibility may prove beneficial if you choose one person to serve as the guardian and another as the trustee to make sure assets are distributed appropriately.
• What accounts don’t require me to take RMDs?
  • Roth IRAs, Roth 401(k)s, Taxable/Individual accounts, and 401(k)s if you’re still working and less than a 5% owner, RMDs are not required until you are done working, 
• Naming Married Couples as a Guardian
  • Example: Do you have a brother who is married to an amazing woman?
    • If your brother happened to get a divorce, does that change whether or not you would want your brother’s wife to act as a guardian, or even act jointly?
• Estate Tax Strategies
  • Understand estate tax strategies based on where you live.
    • Do you have any digital assets? Do you have a website? Do you have social media outlets?
      • These are assets, and although not tangible, does not mean they’re not an asset.
• Does your Will refer to a tangible personal property memorandum?
  • This is a separate document that allows you to make gifts of your tangible personal property.
    • Examples: Jewelry, furniture, electronics, etc.
    • This allows you to make specific gifts in your Will.
• Revocable Trust
  • Do you need to review your trustee/co-trustee/appointment of successors?
    • A trustee is an individual qualified to serve under state laws and responsible for the distribution of your state who will carry out the wishes of your will/trust.
    • You may also choose to have a corporate fiduciary.
      • A corporate fiduciary is a third-party who will carry out the wishes of your will/trust if you don’t have someone you trust to carry out your wishes.
    • Do you have any beneficiaries with special needs?
      • If so, you may want to set up a special needs trust to account for that.
• Is your Will pouring over into your Trust?
  • When individuals make their Revocable Living Trust, they do this to avoid probate. 
    • Assets in your trust avoid probate.
  • You may want to consider a Pour-Over Will.
    • This ensures that any property is transferred, or “poured into” the trust, to avoid probate.
• IRA / 401(k) / Roth IRA / 403(b)
  • Ensure any retirement accounts have updated primary & contingent beneficiaries as desired.
• Personal Assets
  • Taxable accounts will not pass directly to beneficiaries without a Transfer On Death (TOD) agreement.
    • Personal assets won’t directly pass to your desired beneficiaries unless they are in your trust.
• ILIT (Irrevocable Life Insurance Trust)
  • Confirm Trustee is properly administered.
  • ILIT are becoming more rare with the estate tax threshold higher than in the past.
    • ILIT is a Trust with a life insurance policy created to pay any estate taxes due upon Grantor’s passing.
• Split-Interest Trust
  • Examples: Charitable Remainder Trust or Charitable Lead Trust
    • Ensure Trustee is properly administering and annual payments are properly calculated and made.
• Other Trusts
  • Grantor Retained Annuity Trust, Spousal Lifetime Access Trust, Qualified Personal Residence Trust, etc.
    • Ensure they are administered properly.
• Income Tax Returns
  • Ensure Income Tax Returns are properly filed for your Irrevocable Trust.
    • Each Trust has its own tax return.
    • Ensure actions being taken are consistent with terms of the trust so provisions in the Trust are not revoked.
• Overview
  • Titling
    • Review your retirement accounts and confirm beneficiary provisions are accurate.
    • Review your life insurance and confirm beneficiary provisions are accurate.
    • Review your annuities and confirm beneficiary provisions are accurate.
  • Do you own a home?
    • Ensure the home is in the name of your Trust.
  • Do you have assets jointly owned?
    • Ensure there is a Transfer on Death (TOD) or Payable on Death (POD) to avoid probate and assets are passed appropriately.
  • Ensure you have Power of Attorney, Will, Trust & Advanced Directives set up in advance to avoid any complications should a tragic event occur. 

What Issues Should I Consider When Reviewing My Estate Planning Documents?

Timestamps

1:44 – Introduction

3:50 – Ensuring Your Estate Plan Is Sufficient For Your State

4:22 – Power of Attorney

6:08 – General Power of Attorney v. Limited Power of Attorney

8:34 – Primary & Successor Agents

11:54 – Should My Guardian Also Be My Trustee?

14:41 – Gifting Tangible Personal Property

16:27 – Pour-Into Will

18:23 – Trust Alternatives

19:55 – Avoiding Probate

20:05 – Aligning Your Investments With Your Financial Goals

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