Your estate plan is an integral part of your overall financial plan, yet it is often neglected or not fully in order. As much as we don’t want to think about it, there is risk every day and unforeseen events can happen at any time. It’s important to have your estate plan in order for many reasons, but at the very least for some peace of mind. Consider the below estate planning tips:
- Have an estate plan. Don’t leave a mess for your survivors and have the courts or state decide things for you. To develop your plan, your estate planning team should include more than your attorney, such as a financial planner, accountant, and insurance agent.
- Realize that estate planning is about more than saving estate taxes. It’s also about making sure assets would flow the way you intend from all sources, plans are in place should you become incapacitated or on life support, and that there are no unintended consequences.
- Understand the effect the current estate tax law and uncertainty has on your situation. The federal gift and estate exclusion jumped in 2023 by a whopping $860,000 to $12,920,000. However, current law has that cutting in half on 12/31/25. The time to lock in this high exclusion is therefore limited. The 2023 NY estate tax exclusion increased to $6,580,000, but the asset ownership, beneficiary designations and legal estate documents (will, revocable trust) all need to be set up in such a way so as to maximize that.
- Check off that you have a current will, power of attorney, health care proxy, living will, possibly certain lifetime trusts, and beneficiary designations naming both primary and contingent beneficiaries. Special attention is needed if you’re naming minor children as beneficiary
- Follow through to fund trusts formed during lifetime (revocable trust, life insurance trust) so they can accomplish their objectives.
- Take advantage of lifetime gifting opportunities to reduce your taxable estate without incurring a gift tax. Consider larger gifting strategies if needed. First be sure you can afford to gift.
- Coordinate your estate plan with your buy/sell agreement and insurance funding to make sure things would work as intended if you own a business.
- Consider whether charitable giving techniques during lifetime vs at death make sense to reduce your estate while also giving you an income tax deduction.
- Coordinate legal documents and beneficiary designations if you have a child with special needs or a spouse on Medicaid.
- Every 2-3 years, have your estate planning team review your estate plan to make sure it encompasses your whole picture, so that you not only understand how all the components come together in determining how your assets would be distributed to your heirs upon your death, but that you also understand the financial and tax impacts of your estate plan as well – protecting yourself from unintended consequences.
The Bonadio Group’s Estate & Trust team has years of advisory and tax experience. Please do not hesitate to reach out to our trusted experts to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
