Important Estate Planning Factors to Consider
Recent events have created a lot of personal and economic uncertainty for people around the globe. During these uncertain times, it’s not uncommon to start thinking about the future. Not surprisingly, the current global pandemic has led to an increase in personal planning and people developing, reviewing, and modifying their estate plans.
A comprehensive estate plan answers many uncomfortable questions and scenarios. It identifies the people responsible for handling medical decisions, financial affairs, estate affairs, and assets of an individual when they can no longer make these decisions themselves. This provides peace of mind for loved ones and ensures family members respect the individual’s wishes.
It’s extremely important to review estate planning documents regularly. This is the only way to ensure up-to-date information and that the documents reflect current intentions. Although many people believe they can handle estate planning themselves, this isn’t advised. Having a poorly executed plan could have a long-lasting and costly impact on loved ones. Even relatively simple estates can benefit from the advice and assistance of a qualified estate planning professional.
There’s no better time than the present to begin developing or revising an estate plan. In addition to alleviating many of the fears caused by the global crisis, current low interest rates and reduced asset values enhance the ability to engage in cost-effective wealth transfers. Another benefit of acting fast, individuals can take advantage of the temporary doubled estate, gift, and generation-skipping tax (GST) exemption. Although not scheduled for reduction until 2026, the GST exemption may change before that time if legislation passes. This is why it’s so important to begin the estate planning process now.
Estate plans can include a number of documents. When developing a plan, it’s important to know which ones to include. Regardless of the situation, every plan should include a last will and testament, medical power of attorney, financial power of attorney, and living will. While the last will directs the distribution of assets after a person’s death, a living will helps individuals state their wishes should they end up on life support or in an end stage condition. Combined, these documents ensure that family members follow the individual’s wishes, provide loved ones with peace of mind during a difficult time, and later, facilitate the probate process.
Another document to consider as part of the estate plan is a revocable living trust (RLT). This planning tool allows the individual to move assets like investments, bank accounts, real estate, or business holdings into a trust while they are still alive. The assets placed in an RLT avoid probate, which speeds up the transfer of the assets to the beneficiaries. It also protects the privacy of the individual. A trust can also allow an individual some control over the distribution of assets even after death. This can be important in the case of a split family, a second marriage, or a special-needs beneficiary.
Annapolis/DC Area Estate and Tax Planning Consultants
It’s natural to have questions when revising or developing an estate plan. Working with a knowledgeable team of estate planning professionals can help ensure that every factor is considered. This alleviates stress and ensures the best possible outcome. TMDL can help! We have years of experience guiding clients through both the estate planning and administration processes. Please contact us about our services.