Estate and Trusts

As the vibrant colors of autumn paint the landscape, the fall season invites us to reflect on the changes in nature and consider the changes we can make in our own lives. Estate planning, often overlooked, is a vital aspect of ensuring a secure future for your loved ones. Just as leaves fall and transition, estate planning in the fall season presents an opportunity to make necessary arrangements. In this article, we’ll explore why fall is an ideal time for estate planning and offer valuable tips to help you navigate this important process.

Why Fall is an Ideal Time for Estate Planning

Fall serves as a natural reminder of life’s cyclical nature and the inevitability of change. It’s also a time when many people evaluate their financial goals and commitments. Estate planning in the fall offers several benefits:

1. Reflection: As the year winds down, fall encourages introspection. It’s a moment to consider your assets, family dynamics, and wishes for the future.
2. Time for Adjustments: Fall marks the last quarter of the year, giving you a chance to adjust your financial plans and goals to align with your vision for your family’s future.
3. Preparation for the Year’s End: Estate planning in the fall allows you to make the most of available tax advantages before the end of the tax year.
4. Holiday Gatherings: Fall and the upcoming holiday season often mean gatherings with family and friends. It’s an apt time to discuss your estate planning intentions and ensure everyone is on the same page.

Estate Planning Tips for Fall

1. Review Your Will and Trust: If you have a will or trust, review them to ensure they accurately reflect your current wishes. Life changes, such as marriages, births, or deaths, might necessitate updates.
2. Appoint Guardians: If you have minor children, fall is a time to review and update guardianship designations in case of unforeseen events.
3. Beneficiary Designations: Review beneficiary designations on retirement accounts, life insurance policies, and other assets to ensure they’re up to date.
4. Healthcare Directives: Fall is a time to review and potentially update healthcare directives, living wills, and powers of attorney, outlining your preferences for medical care and appointing decision-makers if needed.
5. Charitable Giving: As the holiday season approaches, consider charitable giving strategies. Estate planning can incorporate charitable donations, potentially providing tax benefits while supporting causes you care about.
6. Evaluate Your Estate Tax Situation: If your estate is substantial, consult with financial professionals to assess your potential estate tax liability and explore strategies to minimize it.
7. Organize Important Documents: Compile and organize all important documents, including financial records, insurance policies, legal documents, and account information. This will make it easier for your loved ones to navigate your affairs in case of emergencies.
8. Discuss Your Plans: Use holiday gatherings or family meetings to openly discuss your estate planning intentions with your loved ones. Clear communication can prevent misunderstandings and conflicts down the road.

As leaves fall and nature undergoes change, estate planning in the fall serves as a timely reminder to prepare for the inevitable changes in our lives. By taking the time to review and update your estate plans, you’re ensuring that your loved ones will be cared for according to your wishes. The fall season offers a unique opportunity for reflection, planning, and action. Embrace the spirit of change and ensure a secure future for yourself and your family through thoughtful estate planning.

Giving money to children or grandchildren is a planning strategy that benefits donors and beneficiaries. You can make annual gifts of up to $15,000 each to an unlimited number of recipients in 2021, free of gift and generation-skipping transfer tax, without using any of the lifetime gift exemption. But consider your options for holding gifted assets carefully.

Custodial Accounts

Custodial accounts established under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) allow you to set aside money for any activities that benefit your child. But custodial accounts may not be your best option. Your child will be able to access the funds at a young age — often 18 or 21, depending on state law — and may not have the maturity to use the funds wisely.

Crummey Trust

With a Crummey trust, you specify how the money in the trust should be used and when the beneficiary can receive the assets. If desired, the trust can continue for the beneficiary’s entire lifetime. However, to avoid forfeiting the gift tax annual exclusion, you must notify the beneficiary when you make an annual gift to the trust and give the beneficiary a limited amount of time (e.g., 30 days) to withdraw those funds. A Crummey trust allows more control over the funds, since a beneficiary may be reluctant to go against a donor’s wishes.