10+ Lessons from 2018
Written by Bogutz and Gordon
Every year, we survey the Bogutz & Gordon staff and compile ten lessons learned from the prior year (supplemented by the rumor mill) that could help all of us plan a bit better. In no particular order:
1. Know your stuff. Don’t know whether you own an annuity or an IRA or a 401(k) or a Roth? Find out and report your assets accurately to your estate planning attorney, or authorize your financial advisor and attorney to share information. It can matter.
2. Know what is expected of you. If you are someone’s trustee, agent under power of attorney, conservator, guardian, etc., know your duties in that role. Calendar deadlines to file annual reports with the Court and to prepare accountings for beneficiaries, and if you are not absolutely sure about what you are doing, get help.
3. Clean up. Consider that when you die, someone (often loved ones) will go through your stuff and see it all, including evidence of habits or hobbies you’d prefer to keep secret. If you want a clean legacy, clear out the pornographic magazines, drug paraphernalia, and love letters from your long-ago affair, and maybe even those utility bills from 1972.
4. Getting remarried? Revisit your estate plan, especially if you have kids from a prior relationship. If you die without a Will, your new spouse may find she has to negotiate with kids you haven’t spoken to in years to keep a roof over her head.
5. Getting remarried? Carefully consider whether your new spouse and existing kids can really get along after you die, or whether they should even be expected to. Sharing ownership of a major asset like a house or a business can be even more difficult when the one person who held it all together isn’t around to knock heads or make the peace.
6. Did your parent remarry? Manage your step-parent. If your remarried parent dies, be kind to your step-parent. At least until you know whether he or she has the power to disinherit you. Also realize that you may not be entitled to that information. Make peace.
7. Adjust to change. The popular DNA testing is revealing surprise relatives. If a surprise grandchild shows up on your doorstep, decide whether you want him or her in your estate plan, and change it!
8. Prepare for taxes. Tax law is never stagnant. Everyone assumed the estate tax debate was over. Now here we are again with an even bigger exemption and facing another sunset—or even more dramatic changes if political winds change. Planning for large estates is more complicated and important again. So even if you don’t have $11.4 million in your estate, if you have $5 million, estate tax planning should be on your radar.
9. Know your beneficiaries’ challenges. Consider terms for children’s trusts carefully. If a child has special needs, addiction, shopping, spouse issues or other challenges that may make unfettered access to funds unwise, choose terms and a trustee who can respond accordingly. On the other hand, if a child is capable and mature, consider allowing the child to control his or her own trust. That’s allowed!
10. Real estate isn’t free. If you want your residence or vacation home to stay in a dynasty trust for generations, considering putting some money in there, too. To cover regular costs and perhaps the cost of litigation if a family member is not happy about the arrangement.
Bonus: We’ll say it every year: Revisit ALL beneficiary designations to ensure they match your wishes.