Tidy up your estate and financial planning for the new year!

Herewith a few things to think about as New Year’s resolutions to get done in January, and a few to get done before the end of 2018.

  • Review your estate plan.
    • Check over who you have listed as health care agents, agents under your durable power of attorney, trustees for you, trustees for children, and guardians for children. Do you still have confidence in them? Are they still willing and available? Have they moved far away, and does this matter for the chosen role? Has anyone become old enough to serve, or too old to serve? Are there others more suitable now?
    • Do you know where your documents are? Do your key persons (trustees, etc) know where to get your estate planning documents, find key information (like digital assets), and who to contact in the event of your incapacity or death?
    • If you did your planning with us, read over your “Estate Plan Owner’s Manual” at Tab 1 of your Estate Plan Binder. Read the first part for a summary of your plan, to make sure it still aligns with your wishes. Read the second part to make sure your trust funding is complete.
    • This means how assets are owned, or the death beneficiary designation on certain assets such as life insurance, IRAs, and qualified retirement plans. You should have aligned all of your assets with your estate plan when you created your plan. If not, or if you have acquired assets after you created your estate plan and not funded them properly, you need to now. Call our office if you need help.
    • Digital asset inventory. While you are inventorying your assets and ascertaining that they are funded to your plan, don’t forget digital assets. Account numbers, user names, and passwords for financial accounts, online games, social media accounts, and online storage should be documented. You can keep this information in one password app, to which you give your Agent or Trustee the master password, or it may be best to go “low tech” and write it all on paper. Then let the Agent and Trustee know where to find that paper in case of a problem. Some online accounts have ways for you to designate who can access the account in the event of your incapacity or death; if so, you’ll need to look at exactly what permissions you are giving and decide if you want to designate someone.
    • Letters of Intent. If you have minor children, or adult disabled children, it is imperative that you write and periodically update a Letter of Intent for your Trustees and Guardians. Trusts can’t, and in our view should not attempt to, spell out all of the details of how you want the trust to operate for your child’s benefit. The trust should give the trustee broad discretion, and some general guidelines for various stages of life. But all that your know about your children, their strengths and weaknesses, likes and dislikes, your aspirations and fears for them, details about doctors and medications, their relationships with family and others … all that and more needs to go in a Letter of Intent that you share with your attorney and the persons you have chosen as trustee and guardians for your children.
    • If it has been five years or more since you have reviewed your plan with your attorney, make an appointment for a review with an estate planning attorney (or, if you have special needs children in your life, a review with a law firm focused on special needs advocacy and planning … hint hint).
  • Start getting 2018 income-tax documentation together. True you can’t get 1099’s and W-2’s until January, but you can collect information and documentation on deductible expenses, or basis of assets sold.
  • If you have inherited IRAs or inherited Qualified Retirement Plans, or if you have your own non-Roth IRAs or non-Roth Qualified Retirement Plans, and are required to take minimum distributions (generally by April 1st of the year after you attain age 70-1/2), make sure you have taken minimum distributions for 2018 by the last business day of the year. The penalty (in addition to the tax) for failure to take the minimum is 50% of the amount required but not taken.
  • Take care not to exceed your gift and celebration budget for the holidays. If you don’t have such a budget, make one for next year and stick to it.
  • Annual exclusion gifts. In addition to (1) unlimited gifts to directly pay anyone’s tuition or medical expenses, (2) unlimited charitable gifting, and (3) unlimited gifting to your US Citizen spouse, there is the ability to give to as many persons as you want up to $15,000 per year per recipient ($152,000 if the recipient is your non-US Citizen spouse). If by check, the check has to clear the system by the last business day of the year, so get busy!
  • Bunch charitable gifts. Don’t forget that the standard deduction went up a lot for 2018, the State and Local Income Tax deduction is capped at $10,000, and some home mortgage interest is no longer deductible. So if you want an income-tax deduction for charitable gifts, it may make sense to bunch two years gifting (or more) into a single year. Otherwise, you may not have enough itemized deductions to benefit from the charitable income-tax deduction.
  • If you’ve been ignoring your financial advisor’s calls to come in for a review, call him/her back and set the appointment. Are your financial and retirement goals still the same? Are your ambitions that require money to achieve still the same? Are your investments on track to achieve these goals with a safety level that you can live with? Is your life insurance still suitable for you, or does it need increasing, decreasing, or changing in some way? Are there less expensive policies available for you now? How about your property and casualty insurance (auto, homeowners, etc)? It used to be common to see recommendations for a $1M umbrella policy, but that recommendation is now more commonly $3M.


Posted by Attorney Mark W. Worthington.

Learn more about Special Needs Law Group of Massachusetts here.

This blog post does not constitute legal or tax advice, even if you are presently a client of Special Needs Law Group of Massachusetts, PC, nor is an attorney-client relationship created by reading it. If you want legal or tax advice, you should retain a licensed attorney or tax advisor for that purpose.