It’s early January which means it’s time to make your New Year’s resolutions. Consider adding these Estate Planning resolutions to your 2020 list.
Resolution #1 – Confirm and/or Change your Beneficiary Designations
If you have been advised to make changes to the beneficiary designations of your retirement accounts and life insurance policies (as we often do) and you haven’t yet done so, make the changes in 2020. If you have not yet received good advice, seek it out. Proper beneficiary designations are essential to ensure your Estate Plan works as intended.
Resolution #2 – Understand how the SECURE Act will affect you
The SECURE Act – a federal law signed on December 20, 2019 – dramatically impacts the post-death treatment of IRAs and other retirement accounts. The most significant change is the elimination of the “stretch” life-expectancy payout for most beneficiaries. The new 10-year payout rule will mean higher income taxes for many IRA beneficiaries. You should understand how your family is affected.
(One of my own resolutions is to understand the new law, how it will impact our estate planning clients, and new planning opportunities. More advice from us to come soon!)
Resolution #3 – Plan for State Estate Taxes
Although the federal exemption is now very high, the Massachusetts exemption remains $1 million. Many Massachusetts residents must plan for state estate taxes. Make sure you have an estate plan that includes state estate tax planning.
Resolution #4 – Make Lifetime Taxable Gifts
Lifetime taxable gifts (gifts in excess of the annual exclusion) can substantially reduce both federal and Massachusetts estate taxes. If you have significant assets, consider making taxable gifts to (or for the benefit of) your children or grandchildren in 2020. It is important to seek out good advice before you do!
Resolution #5 – Name a Guardian for your Minor Children
If you have minor children and have not yet named a guardian in the event of your death, prepare an estate plan in 2020 that names one. This can be a difficult and emotional decision for some parents. Remember, an imperfect choice is better than no choice at all. If you do not choose, a court may choose for you.