After the Auld Lang Syne: 2020 Estate Plan Resolutions

The ball has dropped, Auld Lang Syne's been sung, and we’ve all rushed out to sign up for that fitness membership that we've convinced ourselves we're finally going to use this year. Statistics show, however, that by the second week of January, 25 percent of people have already abandoned their New Year's resolutions, and 80 percent of us will have given up on our pledge before February 29. So this year, why not be part of the 20 percent who succeed on their resolutions by setting something a little more obtainable than "diet" or "travel more" and schedule a short appointment with your estate planner to review these promises for 2020:

  • Review your estate plan to be sure it still makes sense in a post-Tax Cuts and Jobs Act environment. Under the TCJA, the estate tax exemption is "doubled" through December 31, 2025, giving taxpayers the ability to transfer over $11 million dollars per person. Considering whether additional lifetime gifting makes sense, whether a credit shelter, marital or family trust is still necessary in your estate plan, and whether reallocation of assets among beneficiaries is needed, should all be part of your 2020 estate plan resolution.
  • Review beneficiaries to ensure they’re up to date on retirement accounts and life insurance policies. Too often beneficiaries get named at the time a policy is purchased or an account is opened, never to see the light of day again. What many fail to realize, however, is that a beneficiary designation typically supersedes all other attempts to devise those assets, including via a will. At the start of 2020, make sure you've updated your beneficiaries to add that child/grandchild that was born since your last update, or remove that divorced spouse or deceased family member, especially in light of some of the changes recently enacted under the SECURE Act.
  • Remove joint ownership designations on assets if joint ownership is no longer desirable. Just like a beneficiary designation, joint tenancies, POD accounts and TOD accounts all transfer by operation of law on the decedent's death. All joint ownership accounts should be reviewed to ensure the arrangement still makes sense.
  • Title all assets intended to go into a revocable trust in the name of the revocable trust. Assets only obtain the protections and advantages of a revocable trust when they’re titled in the name of the revocable trust. Assets left in the name of the decedent must typically still pass through probate, which defeats one of the primary purposes of the revocable trust altogether. Titling an asset in a revocable trust is ordinarily a relatively easy process, so in 2020 make sure all those assets are properly included in that revocable trust.
  • Confirm who owns your insurance policies. Many clients are often led to believe that life insurance proceeds are "tax-free," which is a bit of a misnomer. Life insurance proceeds can be taxable for estate tax purposes if either (1) the policy is owned by the decedent or (2) the policy names the decedent's estate as beneficiary. Making a trust the owner of the insurance policy might be a viable option for situation one, but should only be done after a thorough discussion with your estate planner. Making sure your primary and contingent beneficiaries are up to date and still living is a great way to avoid situation two.

If you haven't set your 2020 resolutions, there's still time. If you have, double down on your chance for success by adding a few more. 2020 brings with it a new year and a new decade; why not get the ‘20s off on the right foot with a quick review of your estate plan?

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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