With many of us working from home due to the COVID-19 virus, now may be the perfect time to get your financial affairs in order. Dominick Parillo shares a few easy things we can all do that won’t require a ton of effort.

With many of us working from home due to the COVID-19 virus, we now have more time to spend with our families and loved ones and can focus on neglected New Year’s resolutions. After you have organized your junk drawer, dusted off your exercise bike, and tried a few new recipes, take some time to ensure your financial affairs are in order.

Don’t overlook the basics

There are a few easy things we all can do that don’t require a ton of effort. You may have already been planning on doing these things but have not had the time. Well, now is the perfect time!

  • Digital assets: In 2020, most people have a virtual presence. Many people do online banking, and you probably have an Amazon account, Facebook, and a few email addresses. Take some time to write down your log-in information and passwords to keep in a safe place in the event your family needs to access your digital assets in an emergency. For the tech savvy there are services that automatically store your login information and passwords on your computer (just make sure your family has the master password to your computer).
  • Organize your documents: If you have existing estate planning documents, it’s critically important that your power of attorney agents, executors, and trustees can easily access them. Estate planning documents aren’t the only important papers – be sure to gather and organize your birth certificates, marriage license, insurance policies, income tax filings, and account statements for major financial assets. If you keep important documents in a shoebox or a desk drawer at home, it may be worthwhile to order a basic lightweight fireproof safe online, have it shipped right to your door, and store your important documents in it. Make sure your loved ones have the key or combination.
  • Create a list: Write down the contact information for all of the important players in your financial life, like your financial advisor, accountant, attorney and insurance agent. That way your family will be able to reach your financial professionals in the event of an emergency.

Review your current plan

When was the last time you reviewed your estate plan? We recommend that our clients review their estate planning documents every three to five years because a lot can change in that time period!

  • Family: If your children were minors when you originally drafted your estate plan and are now competent adults, it may make sense to appoint them as Power of Attorney Agents for Property and Health Care.
  • Beneficiary Designations: Aligning your beneficiary designations with your overall estate plan is absolutely critical. A major gap that many clients often overlook is updating beneficiary designations on retirement accounts and life insurance policies after they implement their estate plans or experience a major life event like the birth of a child, a divorce, or the death of a spouse. Beneficiary designations can be updated by completing simple paperwork with your insurance or financial institution.
  • Changes in Tax Law: The Tax Cuts and Jobs Act of 2017 raised the federal estate tax exemption to $10 million per person (now $11.58 million per person adjusted for inflation). Even after the increased exemptions are set to expire at the end of 2025, each person may have an inflation adjusted federal exemption of close to $6 million. Many older estate plans were designed to avoid or reduce federal estate tax. Now federal estate tax is no longer an issue for many families. Some federal estate tax planning provisions may create unnecessary administrative complexity or unnecessarily limit access to trust funds to an ascertainable standard for a surviving spouse. How is your plan set up? You may want to change the focus from estate tax planning to distribution planning for beneficiaries and flexibility for your trustees. In addition, the SECURE Act that was passed at the end of 2019 has drastically changed the required minimum distribution rules for IRA beneficiaries. Instead of withdrawing your IRA over their life expectancies, your adult children are now required to fully withdraw your IRA within ten years following the year of your death. You may have named your trust as beneficiary of your IRA to protect assets for your children. It may be worthwhile to reevaluate your asset protection and intergenerational income tax planning goals in light of recent changes to RMD rules under the SECURE Act.

If you don’t have a plan yet or want to make changes to your existing plan, don’t fret.

Many attorneys are working remotely and with the advent of modern technology you can complete your estate plan virtually. You can discuss the design of your plan over the phone or on a video chat, and legal documents can be mailed or emailed to you for your signature.

Some documents like Wills require disinterested witnesses for proper execution, and each state may have other unique execution requirements such as notarization for documents like Powers of Attorney or Trusts. These formalities should not be an obstacle even in the current social distancing environment, as law firms, banks and other financial service providers are considered essential and can provide you with witnesses and notarization services.

In the coming weeks, please continue to focus on your health, wellness, and family. Your Savant team is here to support you and your family with all your financial needs.

Author Dominick J. Parillo Director of Wealth Transfer

Dominick earned a JD degree from the George Mason University School of Law. He focuses on estate planning and wealth transfer strategies for high net worth families and business owners and advises clients on all facets of trust and estate administration.

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