2023’s Estate Planning Resolutions

After having a fantastic Christmas, January is a time to make estate planning resolutions to get your things in order and ultimately provide peace of mind.

Here are five resolutions to ensure your estate plan is where it should be in 2023.

1. Resolve to Have an Estate Plan

I meet many clients who still need a Will, Power of Attorney, or other estate planning documents—having put off this task because they are too young. They may need something to pass on or assume spouses and kids get everything or may need to get around to it.

If you have written a will or other estate planning documents, it’s time to review your instructions—additions or losses of family members. New asset acquisitions, a move overseas, and the maturity of children are some of the reasons you should review your existing instructions.

Please consider writing your will.

2. Resolve to Get it Done Right

You want to ensure your assets go where you want them at your death. Ensuring they are appropriately managed for young beneficiaries. Protecting assets for your family. Avoiding delays and costs in probate or saving your beneficiaries as much income and estate tax as possible are essential steps.

How carrying out your estate plan has a significant impact on your family or other heirs. It can take a long time for your loved ones to receive your assets, resulting in unnecessary delays. Some beneficiaries could miss out, or unwitting heirs could inherit. Home mortgages can be repossessed, education fees stopped, and lifestyles substantially altered. Your demise can be about the missing person, not rebuilding lives.

You may attempt to draft your own Will or other legal documents, but there are better strategies than that.

In my 35 years of experience, this is the first time I have seen a Will drafted by a client that will function as intended and not cause more problems than it solves (missed beneficiaries, wrong beneficiaries, unclaimed assets, etc.).

Get it done right. You will have the peace of mind that crossing this task off your New Year’s Resolutions will bring.

3. Resolve to make sure your Beneficiary Designations are Up to Date

Many of your most significant assets (life insurance, retirement plans/accounts, annuities) will be paid to a designated beneficiary at your death if you have nominated them and kept the instructions updated.

Properly designating these beneficiaries is more complicated than it may appear. Understanding the implications of specific beneficiary designations is crucial.

It can be especially significant in estate planning for a minor or disabled child. A trust for the benefit of a young or disabled beneficiary can be instrumental in avoiding a lengthy and costly court proceeding. By appointing a guardian and preventing the loss of public benefits, a disabled beneficiary may be receiving.

One common mistake people make is to nominate a beneficiary to a life insurance plan but name another in their will. The life insurance nomination takes precedence in this case.

Understanding how distributions from retirement accounts work after the account owner’s death. How different beneficiary designations will impact the size, frequency, and income tax payable on those distributions is crucial to appropriate assignments.

Having the proper advice in place can ensure that the right assets go to the right people and understand the amount so your loved ones can also plan.

4. Resolve to have Incapacitation documents in Place.

Much of the estate planning you do is for the benefit of your family or other heirs and will never impact you as they relate to your death.

Creating a power of attorney document that reflects your wishes financially and (separately) medically is one area of estate planning which will directly and significantly impact you. (If you experience mental incapacitation before death).

Many people deliberate over this document more than their will. The “attorney” you appoint is someone that looks after your finances and health care decisions. You can have separate attorneys. 

As your Next of Kin will be powerless without a Power of Attorney, if you become mentally incapacitated, one could argue that this document is more important than your will. 

5. Resolve to Make Sure People You Care About Have a Plan Too.

Estate Planning is essential for anyone over the age of 18. College-aged children and elderly parents should have powers of attorney and health care documents. This will allow someone to make financial and health care decisions for them if they are ill or incapacitated.

Parents of young children should name guardians for their children. A trust can manage assets for young beneficiaries to avoid a child receiving control of ALL inheritance at age 18. (You can dictate what age they can receive your hard-earned assets). 

Those who leave a significant inheritance to their children should consider asset protection planning. To protect inherited assets from a child’s creditors, divorcing spouses, spendthrift activity, etc.

Older couples or others with large estates can save their heir’s significant estate taxes in certain parts of the world with proper estate planning.

Elderly parents may want to plan to protect assets from long-term care liability. Certain countries use your help to pay for their elderly care.

If a friend or a family member needs the inspiration to make estate planning a 2023 resolution. Please share this article with them.

Happy New Year! … and Happy Planning.