Your 5 Task Year-End Estate Planning To-Do List
2023 is fast approaching. As we all prepare for the holidays and a new year, it is important that we wrap up any loose strings. Before entering into the new year, here are some things that need to be on your end of year checklist:
- Make Sure Your Estate Planning is Up To Date
Will or Trusts
Now that the federal estate tax exemption if fixed at $12.06 million ($12.92 million in 2023), it is important to review your estate planning to ensure that it still makes sense. For example, when reviewing your estate planning documents, look for such terms as “Marital Trust,” “QTIP Trust,” “Spousal Trust,” “A Trust,” “Family Trust,” “Credit Shelter Trust,” or “B Trust.” With the exemption amount so high, it may not be necessary to utilize these planning strategies anymore.
In addition, you will want to make sure those individuals you have appointed to serve as your fiduciaries (successor trustee, agent under a financial power of attorney, patient advocate, trust protector, etc.) are still able to act on your behalf if the need arises.
Lastly, if your family has gone through any changes such as a birth, death, marriage, divorce, etc., you will want to double check the distribution scheme in your will or trust to make sure that the beneficiaries are still those you would like to leave assets to.
Health Care Directives
While the federal Health Insurance Portability and Accountability Act (known as “HIPAA” for short) was enacted in 1996, the rules governing it were not effective until April 14, 2003. Thus, if your estate plan was created before then and you have not updated it since, you will definitely need to sign new health care directives so that they are in compliance with the HIPAA rules.
With that said, it’s possible that health care directives signed in 2003 or later lack HIPAA language, so check with us just to make sure that your estate plan documents reference and take into consideration the HIPAA rules.
Financial Power of Attorney
How old is your Power of Attorney? Because of liability risks, banks and other financial institutions are often wary of accepting Powers of Attorney that are more than a couple of years old. This means that if you become incapacitated, your agent may have to jump through hoops to get your stale Power of Attorney honored, if it can be done at all. This could cost your family valuable time and money.
And, several states have enacted new laws governing Powers of Attorney. If you want to increase the likelihood that your Power of Attorney will work without any hitches, then redo your Power of Attorney every few years so that it doesn’t end up becoming a stale and useless piece of paper.
- Check Your Beneficiary Designations
Another area of estate planning that needs revisiting at the end of the year are your beneficiary designations on any life insurance, retirement accounts, bank accounts, vehicles, or real estate. If you have previously completed the forms for any of these assets, you should review them to ensure the beneficiary named is still the person(s) you want receiving the assets.
If you have not done so already, you also should make sure that your estate planning attorney has this information as well. Because a beneficiary designation may overrule any provisions you have in your will or trust, it is important that your designations and other estate planning documents all match and carry out your objective instead of having contrary intents.
- Gather Tax Documents for 2022 Income Tax Return
It would be prudent to spend a little extra time collecting the necessary paperwork to show your income and any deductions you may be claiming instead of waiting until the last minute.
- Review Car and Homeowners Insurance Policies
Everyone likes to save money and an easy way to do so is to call you insurance agent. Analyze the coverage you currently have for your home and car to see if you are properly covered and to see if there are any additional savings available to you. Sometimes, you can save money by having more than one policy through an insurer. You may also be able to get a reduction on your rates if you have not filed any claims within a specific period of time. You never know unless you ask.
- Review Your Paycheck Withholdings
When it comes to your 401(k), IRA, and Health Savings Account, the federal government allows you to contribute a maximum amount per year pre-tax. As we approach the end of the year, it is a good idea to review how much you have contributed and see if you are able to give more. Because this is done pre-tax, it is a good way to put more money away for your retirement or future medical needs while saving some money on your tax bill now.
Call Us Today!
The end of the year can be a stressful time for many, but by completing this to-do list, you will be setting up for a financially secure new year. If you have any questions or need to schedule an appointment to review your estate planning, please give us a call.