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Getting Your Affairs in Order
The professionals to consult when creating an estate plan.

by Liz Hunter

Over the course of the past few months, many of us have been forced to take a long, hard look at our lives and the things we value most. Otherwise carefree existences were suddenly challenged by risks not experienced in generations, motivating many to take action on things we’ve put off, whether it was home improvements or even the serious matters of estate planning.

Now more than ever it’s essential to speak with professionals who can organize important documents and ensure your assets are managed and go to the right people if something happens to you. 

 “There are four essential documents that everyone should have: a will, power of attorney with health care proxy, living will and a Health Insurance Portability and Accountability Act (HIPAA) release form,” says Jim Turpin, wealth and legacy planner at Chelsea Wealth Management. “Seventy percent of new clients I see either don’t have these documents in place or have not updated them in the last 10 years.”

Turpin says these legal  documents should be handled by a qualified estate planning attorney, and should be updated when there is a lifechanging event such as marriage, death, birth of a child, sale or purchase of business, or a change in health status. 

 “Even though we’re not attorneys, we preach this all the time,” concurs Stan Molotsky, founder of SHM Financial. “Everyone should have a will, even if going into college, and a power of attorney (POA). God forbid a college student gets sick and the parents want to find out medical information, but they can’t get it without a POA. It rarely happens but our job is to bring it up and make life less complicated if something does happen.”

While estate planning attorneys are the ones who draw up the legal documents, financial professionals work  closely with them to help construct how the legal plan will meet your financial goals. “Clients could be on the high end, with a large life insurance policy to pass on, so we’ll want to create a plan on where the money should go, such as a trust,” Turpin says. “But even for clients who don’t have a lot to leave or haven’t done a lot of planning, an attorney is key in structuring their estate so that whatever assets they do have don’t get wasted. My financial solution has to marry up with the attorney’s legal  end and meet the objective the family is looking for.”

Avani Bharucha, CPA/MBA, associate partner at Baratz & Associates, PA, advises on the inclusion of  accountants in the estate planning process. “Since  we generally have contact with our clients at least once a year, we also know changes in a client’s personal situation that can require changes to estate plans. This knowledge can be used to benefit the client either by financial recommendations or suggestions to follow up with an attorney,” she says.

Additionally, ever-changing tax laws could impact your current will. “Federal and state laws are constantly changing in the area of estate and inheritance taxes. An updated will is critical to taking advantage of various tax benefits as relevant tax laws change and evolve,” says Bharucha. “Not reviewing  these documents periodically for tax law changes can undo the good estate planning work done in the first place.”

An estate plan should begin with collecting  the things that actually comprise an estate, which includes bank accounts, investments,  personal property, life insurance, real estate and retirement plans. Totaling up your net worth will determine if it’s enough to owe federal estate taxes or inheritance taxes. Those with modest assets can still help alleviate the probate process—the court-supervised process of authenticating a will.

Molotsky says individuals may choose to make accounts—stocks, savings, COD, checking—payable to someone upon death to avoid the probate process.  “This bypasses all the nonsense they’d have to go through to get the money; it’s a faster process. Otherwise it could be caught up in probate for six months to six years,” he says.

Specifically naming beneficiaries is important for assets to be properly dispersed, especially  for 401(k) and 529 plans. “Just proclaiming  that ‘all my assets to be divided equally between’ or some such language in a will doesn’t get the job done,” says Bharucha, who adds that all 401(k) accounts should have primary and contingent beneficiaries.

 “Beneficiary designations for 401(k)s over- ride the contents of a will. When you pass away without designating a beneficiary for your 401(k), there are several factors that determine who receives your account funds. If you are married, your 401(k) will most likely pass to your spouse. If you are not married, the recipients of your account are determined either by the terms of your will or by your state’s intestacy laws,” she says.

For 529 accounts, set up successor owner designation. Bharucha says this person has all the same rights and decision-making power that the original owner had, so someone with a like-minded regard to the money’s use would be prudent. “If no successor owner is named, the account will transfer to the plan’s beneficiary and could  create a new set of problems, especially if the plan is sizable. An 18-year-old may not have the discipline to use the money for the intended educational purpose. If the beneficiary is under 18, a court may assign a successor until the child becomes an adult.”

Along with determining beneficiaries, just as important is choosing who will execute your will and their ability to handle the responsibilities. As Sean Rice, CTFA, vice president and trust officer at Garden State Trust Company, says, a family or friend is not often prepared or experienced to act as an executor. “If your assets are in a trust, of which there are many scenarios and types, it can be complicated,” he says. “It’s worth exploring professional fiduciaries who can manage the trust and act as a neutral third party with no emotional ties to the decisions.”

For instance, special needs trusts protect disabled individuals from  losing eligibility for government benefits in the event of receiving a large s um of money. Rice says, were those assets to be given  outright, they would be seen as available resources and potentially disqualify them from crucial services. “As trustees we can administer the funds accordingly and ensure compliance with government regulations,” he says.

Rice also works with an emerging area of estate planning, one that may be of particular interest to those of us who rely so much on technology.  “Digital estate planning is increasing in importance,” he says. “This focuses on the passwords  to online accounts, including social media profiles or crypto-currency accounts that many clients in the younger generation have.”

This may not be something you’d think of leaving in a will, but imagine the potential of intellectual property, such as an unfinished manuscript or artwork, left inaccessible because of an unknown password. “You should absolutely leave a detailed and organized list of logins and passwords  to the executor, and stay in communication with estate planners and attorneys to update them,” Rice says.

Ultimately, no matter what your age or depth of assets, taking these steps to put the most valuable pieces of your life in order brings peace of mind.

Published (and copyrighted) in Suburban Family Magazine, Volume 11, Issue 6 (August 2020).
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