One of the common misconceptions people have about estate planning, is that the most impactful aspects are highly technical, and are focused on things like evaluating the potential tax benefits of establishing a GRAT or a charitable bequest.

In my experience helping individuals and families develop long term wealth and legacy plans, I have found that before you get into the tax planning side of the equation, you first have to make sure the basics are in place. To see where someone is with the basic elements of estate planning, I ask them a few simple questions:

Do you have a will, executed and on file, with your attorney or executor?

Have you named your power of attorney for your health, and for your finances?

When was the last time you reviewed your will?

If you have executed your will, but haven’t reviewed it in the past five to ten years, there are probably many issues that have come up in the interim. For instance, estate plans typically include naming a trustee to serve on trusts for your heirs, but if it’s been years since you reviewed the documents, you may have named a trustee who is no longer close to your family, and may not even know your heirs. If the trustee is no longer a part of your family’s life, they would be ill-equipped to make the decisions they would be asked to make, such as determining how much money should be allocated to pay for school, or how much money should be distributed to support your heirs’ lifestyles, or determining if their lifestyles are in accordance with your family’s values.

Another aspect that must be considered when reviewing your will, is how have the laws changed in the years since it was last reviewed? One area that has changed quite a bit over the past 20 years is the federal exemption amount which can be passed on to your heirs free of the estate tax. If you completed your will in 2001 based on the exemption level at the time, which was $675,000, but your estate was valued at $2,000,000, and may now be valued at $10,000,000, it would be very beneficial to review the language on record to make sure it reflects any changes to the tax code that have taken place, as well as your current vision for your legacy, and update them accordingly.

So before you can get into the technical aspects of estate planning to maximize your tax benefits, do the simple thing first – review your will, and healthcare and financial powers, to make sure that all of your elections still make sense, and that your wishes are properly articulated to support your vision for your legacy.

Interested in learning more about estate planning? Click here to reach out to our wealth planning team with any questions you may have.  

Chris Roe, CPA/PFS

Partner and Managing Director

Hall of