Nobody likes to think about dying. But it happens whether we prepare for it or not. And if you don’t do some advance planning it can cause even more longer lasting pain and grief, not to mention money and strained relations for your loved ones.
Many people don’t think they have an “estate” but odds are — house, car, stock, Thrift Savings Plan balance, insurance — you do. Odds are you are in fact worth more dead than alive, in a manner of speaking.
So we asked Tom O’Rourke for some words of wisdom. He’s an estate-tax attorney in the Washington, D.C. area, also a long-time IRS employee and Vietnam vet. He’s been working with clients — many of them active or retired feds — for decades. And he’s my guest on today’s Your Turn radio show at 10 a.m. EST. You can listen at www.federalnewsnetwork.com or at 1500 AM in the D.C. area. Shows are archived on our website so you can listen again anytime or refer it to a friend. If you have questions for Tom, send them to me before showtime at firstname.lastname@example.org.
Perhaps after years of procrastinating you have finally completed your estate plan? And if so, now that you have it, what do you do with it? The following is a list Tom worked up of things you may wish to consider for estate plan, such as:
Where do I keep it? Your plan should be kept is a secure location known to the persons who will be called upon to administer it. Some options include a safe deposit box, a fire proof safe, the court in the county you reside, or have the lawyer who helped you prepare the plan.
Who should have a copy of it? This is generally a matter of personal preference. Some persons give a copy to everybody who has an interest in the plan such as the beneficiaries and the persons being called upon to administer it. Others prefer to keep it private. It is essential that the persons who will be called upon to administer the plan — i.e. the executor, personal representative, trustee or agent under powers of attorney — know where they can gain immediate access to it.
Review your beneficiary designations. Many of your most valuable assets are governed by beneficiary designations and not by your will or trust. Such assets include your retirement annuity, TSP and IRA accounts; life insurance, and possibly such assets as bank accounts, and mutual fund or brokerage accounts.
Review how you hold title to your assets. Certain jointly-held assets pass by operation of law to a surviving owner and may not be affected by your will or trust.
How long does my estate plan last? An estate plan remains in effect until it is revoked. It does not have a specified termination point.
When should I amend my estate plan? You should review your estate plan periodically and it should be modified if there has been a change in circumstances or a change in the law.
What are examples of when I should revise my estate plan?
A birth, death, marriage or divorce of persons named in the estate plan.
A change in circumstances such as the person who has been named as agent of your power of attorney relocates and is no longer conveniently available to help you.
A change in your financial situation.
A change in your wishes.
A change in the law.
Have there been any changes in the law that would make it prudent for me to revise my estate plan? There have been significant changes in the estate and gift tax laws in recent years that have made it easier for most people to avoid estate taxes by increasing the estate tax exemption. Thus, if your existing plan was structured to allow you to avoid estate tax, it would be advisable to review the plan.
Many states have adopted uniform or statutory powers of attorney that are easy to implement and generally must be accepted by third parties. If you have not adopted your state’s statutory for power of attorney you may wish to consider this.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act became law effective as of Jan. 1. This law has a significant impact on persons who hold tax deferred account. Some of the most significant changes include the following:
The age at which a person must take required minimum distributions has been raised from 70 ½ to age 72. This applies to all persons who reach age 70 ½ on or after Jan. 1, 2020.
Assets must be withdrawn from a tax deferred account within 10 years after the death of the account owner. The key exceptions to this 10-year withdrawal limit apply to a surviving spouse, minor child, disabled individual, or a beneficiary who is less than 10 years younger than the account owner.
A person who has “earned income” may continue to contribute to an IRA after reaching age 70 ½.
An account owner who makes a qualified withdrawal to pay expenses of birth or adoption expenses is not subject to the 10% early distribution penalty.
A person may take a tax-free distribution from a section 529 plan to pay up to $10,000 of education indebtedness.
Now that you have done the hard part by implementing your estate plan, you need to be aware of the need to review it periodically to insure that it continues to meet your needs.
Still keeping up with that resolution to start exercising again this year? Don’t feel too bad if you haven’t. A study by British non-profit UKActive found that the average adult spends more time on the toilet than they do exercising. An average of three hours and nine minutes on the toilet each week, but only around one hour and 30 minutes being physically active.