Most financial planners offer estate planning as part of their practice, but new types of assets and changing legislation can make it a challenge to stay ahead of the shifting environment.
There are a number of new considerations that finance pros should keep in mind when it comes to estate planning.
- Don’t neglect to plan for estate tax. The current $11.4 million exclusion will revert to $5.5 million in 2025, and it could go even lower depending on the political climate. Remember too that retirement assets are subject to estate and income tax.
- Fund your living trust. After it’s set up by an attorney, it must be funded in order to move assets in and avoid probate. A revocable living trust means you can make changes in terms and beneficiaries and move assets into and out of the trust.
- Be aware of all the options before allowing life insurance to lapse. At the current estate tax exemption level, many older people are surrendering insurance they bought to cover estate taxes. It can be more valuable as a life settlement transaction, so value that option before considering a surrender.
- Keep track of passwords! If a client dies without leaving passwords, family, advisors and attorneys can be denied access to important accounts. Be sure that digital assets are accessible.
- Donate to causes you value. Knowing that assets will support philanthropic endeavors is very important to many clients. One useful strategy is to name a charity as the beneficiary of an IRA, which saves heirs federal and state income tax.
- Beneficiaries can enjoy tax-free income through an inherited Roth IRA. Required minimum distributions must start by December 31 of the year after the owner dies. This can means years of tax-free income for younger beneficiaries.
- Encourage clients to appoint a trust protector. A trust protector will ensure that the intent of a trust is preserved. They can make amendments necessitated by changes in law, resolve disputes between multiple trustees and even replace a trustee if necessary.
For more information, please read:
Eight Nontraditional Estate Planning Tips For Finance Pros And Their Clients | Forbes