With the estate and gift tax exemption at $11.58 million ($23.16 million for a married couple), there are fewer people that are exposed to the federal estate and gift tax.  However, unbeknownst to many, the $11.58 million exemption (indexed for inflation) will be retired in 2025 and go back to pre-2018 level of $5 million. Accordingly, it is important than ever to revisit your estate plan annually to make sure the plan considers the ever-changing environment.

Now, this does not mean that estate planning is only needed for those who have amassed an estate in excess of $11.58 million, or even $5 million, since there are other estate planning matters that pertain to a majority of the people with an estate of $5 million or less.

One of the most important considerations of your estate plan is making sure that your money, regardless of the amount, goes where you want it to go. Did you know that a will or living trust does not determine the beneficiary for the more common assets of a decedent’s estate such as life insurance, retirement accounts and 529 accounts? In fact, the beneficiary designation forms for life insurance policies, retirement accounts and 529 plans determine who receives the insurance proceeds, retirement and 529 account assets regardless of what your will or trust document says.  In addition, title to assets is also important in designating the who receives the property upon one’s death.

To get things in order, here are a few items to consider:

  • Make sure that you update the beneficiary designation forms for IRAs and other retirement accounts, including company benefit plans. These forms should be revisited each year at a minimum, but as soon as possible after lifetime events such as a divorce.
  • For ownership of bank and brokerage firm accounts, complete a Transfer of Death (TOD) or Payable on Death (POD) form to establish or change beneficiaries.
  • Look to see how your property is owned, a common way to title property owned by more than one person is Joint Tenants with Right of Survivorship (JTWROS).   This simply means that the surviving joint tenant (owner) will automatically take over sole ownership when the other joint tenant passes away. Although this keeps the property out of probate, the property may not go where you want it to go.

Your Will is the backbone to the estate planning process, but it doesn’t cover all your estate planning desires and there is a myriad of other items must be considered along with it.  And, as the political landscape changes, so will estate taxes so don’t get caught unprepared.

Questions?

While estate planning is a comprehensive and year-round process, it is always a good time to review and ensure that your goals are being met. Our goal for clients is to help them rest assured that their estate is in good hands so that they can focus on living life to the fullest extent. If you have questions about estate planning or need assistance with an accounting or financial planning issue, Barnes Dennig can help. For additional information please call us at 513-241-8313 or click here to contact us. We look forward to speaking with you soon.