Given the turn in the economy and the uncertainty related to the incoming administration, the focus of this post will divert to estate planning issues in a time of economic and tax uncertainty. This post focuses on the review and consideration that should be given to your plan at this time.
Reconsider fiduciary appointments. Who is your personal representative? If you have a trust, who have you named as trustee? Are you completely confident in your appointments? Consider naming co-fiduciaries, especially if you have individual appointees. Review your documents to be sure there are provisions allowing beneficiaries to make appropriate changes in the event of mismanagement by a fiduciary or the failure of a bank named as trustee.
Consider being more specific in your directions to fiduciaries. Fiduciaries are governed by a variety of rules regarding investment of assets and dealing with beneficiaries. A fiduciary is required to invest and manage estate assets as a prudent investor would and to balance the interests of the beneficiaries. You can and should provide specific directions to the fiduciaries if you desire special consideration be given to the needs of one beneficiary as compared to others. If you own a closely held business and want your estate to be able to continue to won the business, add a direction to your documents specifying that the fiduciary do so.
Review dispositive schemes. Your current scheme of asset distribution is likely based on the value of assets at the time you established the plan. A change in value or structure of your estate impacts your ability to accomplish the goals of your estate plan. Revisit your estate planning goals and establish a priority. Then, review your estate plan structure to ensure that your goals will still be acheived. Adjust your plan as necessary. Typical goals may include providing for yourself and a spouse as long as either is living, for an ailing parent, for minor children, or for a disabled child.
Review gift plans. If you are currently making gifts to reduce your estate as a tax planning strategy, consider whether such gift plan should be deferred, accelerated, or expanded.
Many proposals for the estate tax system are being bandied about. We are unlikely to have certainty for many months. At present, there remains the ability to make a lifetime transfer to your heirs up to one million dollars without estate tax consequenses. To the extent you remain comfortable with making a significant gift, the present economy offers an opportunity to achieve such a gift while asset values are low.
If you have concerns about your estate sustaining a sufficient level of income for your needs following a downturn in value, consider discontinuing gifts for the present time. Also consider a possible reallocation of gifts if one of your beneficiaries has been impacted by the economy more than others.
Be proactive. As difficult as it may be to open your account statements, do so. Be proactive in making appropriate revisions to your planning.
© 2009 Parsonage Vandenack Williams LLC