Estate Tax Planning: No Professional Needed

 
 
 
Tax Cuts and Jobs Act of 2017

There has been lots of excitement regarding the estate tax changes put forth in the Tax Cuts and Jobs Act of 2017. While these changes may be short-lived (given the unsteadiness of our political climate), the new law doubled the estate tax exemption to $11.4 million per individual in 2019. This means that most estates, now, will not be subject to estate tax whatsoever.  Even if your estate is below the taxable threshold, tax reform is a good excuse to check your estate plan and make sure it still makes sense for your family. While attorneys and CPAs are excellent resources to assist you with your overall estate plan, there are several things that all individuals can do on their own. The suggestions below can save your family a lot of grief (and money) down the road and cost nothing but time.

Check your Beneficiaries

When you die, your financial accounts and life insurance proceeds will be distributed to whoever is listed as the designated beneficiaries. If there is a discrepancy between your will and the beneficiaries, the beneficiary designations will take precedence. Make sure who is listed as the beneficiary is whom you intend the money to go to.  Has your marital status changed? Do you have children or more of them? Does the charity you listed still exist? Mistakes here can cause confusion, legal action, and plenty of hurt feelings. Be sure to review your beneficiaries periodically and especially after major life events.

Letter of Instruction

Sometimes we have clients who are both in tune with their financial affairs. More often, though, one spouse holds the sole responsibility of paying bills, managing investment accounts, filing taxes, and obtaining insurance. If that spouse passes first, the other spouse is left with a mounting list of things to do and no direction as to how to do them. A letter of instruction can be hugely beneficial in this situation. A letter of instruction is a letter to your spouse that contains whatever information they need to move on with life: a list of your financial accounts and insurance policies (including account numbers, user names, and passwords), the names of your attorney, CPA, financial adviser, and insurance agent, where your will is located, what bills get paid every month, etc. A letter like this certainly takes time to prepare and to update, but it can provide a guiding light for your spouse when you are gone.

Beware of Obituaries

When a loved one dies, it is tradition to write a thoughtful obituary that summarizes the life he or she led. Usually included are significant attributes of that person: birth name, birthday, names of their parents, names of their spouse and children, careers, pastimes, and loved pets.  Often, this is information that very few people know; this is information that makes perfect passwords or security questions for our financial account. Unfortunately, identity thieves have targeted obituaries and use the information to hack into financial accounts of the deceased. It’s despicable, but it’s happening. When your loved one passes, you should think twice about how much personal information you include in their obituary. It can undo all the financial planning your loved one did before they passed.

Summary

Updating the beneficiaries on your financial accounts, writing letters of instruction, and rethinking obituary language are simple ideas that cost nothing but time to implement.  When your day comes, you certainly do not want to add to your family’s grief. You can rest easy knowing your financial affairs are lined up for your loved ones.

Allison Miller is a Senior Manager at ATKG and is a Certified Public Accountant. She graduated Summa Cum Laude and obtained her bachelors and master’s degrees in Accounting from Texas A&M University. Allison can be reached at 210.733.6611 or via email at amiller@atkgcpa.com

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