The holidays are a time for joy and celebration. During the festivities, it is easy to lose sight of important aspects related to estate and business planning. However, taking time to organize your affairs can be one of nicest gifts you can give your family. There are five key aspects of estate and business planning that you should discuss with your family and your attorney before the New Year begins.
1. Disposition of your property. Many people have an idea of whom they would like to inherit their property at their death. It is important to determine if your unique situation requires special planning, including:
- Estate tax liability
- Avoiding probate
- Preserving assets for young or immature family members
- Caring for young or special needs family members
- Blended families
Discussing your goals with an experienced estate planning attorney will not only help ensure that your assets are distributed to the right people, but also ensure that they are protected and utilized to the fullest extent possible.
2. Planning for your incapacity. Advanced directives allow you to name the person you would like to manage your finances and health care decisions when you can no longer make these determinations. Implementing these documents will save your loved ones time and money in the event of a sudden accident or illness, so they can help you get the care you need as soon as possible.
3. Updating estate planning documents. Even if you have an estate plan that includes the disposition of your assets and arrangements for your incapacity, it is important to periodically review your plan with your attorney to ensure that it still meets your needs. Some of the most important documents to consider updating are beneficiary designations on retirement plans and life insurance policies. With ever changing federal estate tax laws, periodically reviewing your plan ensures that your assets are sufficiently protected while not unnecessarily restricted.
4. Family and charitable gifting. The end of the year is the most common time people make gifts to family members or charities. Certain strategies can maximize the effectiveness of your desired gifting, especially in light of the potential tax law changes.
5. Business Planning. If you own a business, have you considered what will happen to the business at your death? Is a buy-sell agreement in place to permit your partners or family members to purchase your shares? Do you or your partners have sufficient life insurance policies in place to fund the purchase? More importantly, are your governing documents compliant with the current laws? The IRS recently released new audit rules requiring updates to your partnership and operating agreements addressing the appointment of a “partnership representative” to bind the partnership or LLC and the owners during an audit.
These topics are a starting point to begin thinking about your estate and business planning needs.