Have you ever wondered, what is the one thing people don’t do but should, when it comes to year-end estate planning activities? Here are four items that come to mind based on my experience over the last 17 years as a trusts and estates lawyer:
1. Review your health care advance directives It is far too often that I see outdated powers of attorney for health care. In fact, many people go years without updating these important documents. Even if you do not update the document, give copies to your loved ones or discuss your wishes with your family. Make sure you address the following:
Who is currently appointed to make health care decisions for you if you are incapacitated?
What are your wishes regarding your continued care if you are very ill?
Does your significant other and next of kin really know and understand your wishes for end-of-life treatment?
Have you delivered copies of the document to the persons you have named as your decision-makers?”
2. Make sure your beneficiary designations are up-to-date It is crucial to review beneficiary designation forms for retirement accounts, brokerage accounts and bank accounts. First, people should do this to ensure that a beneficiary is named (many clients have accounts with no beneficiary designated) and second, to avoid probate of those accounts. However, never name a minor child as a beneficiary since it requires something called a guardianship estate and this process must be conducted in probate court. If your estate is to pass to minor children, please contact an attorney to learn about better options of how to pass assets to children.
3. Consider a Qualified Charitable Distribution I advise clients to consider the qualified charitable distribution rule (‘QCD’) which was reinstated through December 31, 2013 by the American Taxpayer Relief Act. This rule permits individuals over age 70 ½ to use their required minimum distributions to make charitable distributions up to $100,000 directly from their traditional IRAs. This is a win-win: the QCDs aren’t subject to ordinary federal income taxes, and our client is able to meet their required minimum distribution requirements while supporting those charitable causes that are most important to them.
4. Talk to your children about disposition of your personal belongings It’s surprising to see how many family disputes after death result from disagreements over disposition of personal belongings. Many of these assets have no significant financial value, but have a strong emotional connection. Another related area that should be discussed is the value, disposition and history of collections, such as artworks. Make sure you address the following:
Do your children want or need your furnishings and personal items?
Do they all want the same two or three items?
Does your family know where you keep documentation of the purchase price and potential value of collection items?
*RANDALL A. DENHA, J.D,, LL.M., principal and founder of the law firm of Denha & Associates, PLLC with offices in Birmingham, MI and West Bloomfield, MI. Mr. Denha continues to be recognized as a “Super Lawyer” by Michigan Super Lawyers in the areas of Trusts and Estates; a “Top Lawyer” by D Business Magazine in the areas of Estate Planning and Tax Law; a Five Star Wealth Planning Professional and a New York Times Top Attorney in Michigan. Mr. Denha can be reached at 248-265-4100 or by email at firstname.lastname@example.org