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View From the Trenches

By:  Kristina Bolhouse, CPA/PFS, CFP®

Like the impact of a new drug or medical treatment, we are now seeing firsthand the benefits of good estate planning as well as the implications of the new estate tax law changes that went into effect in 2013. Here are some specifics we have recently observed:

  1. Access – Good estate planning ensures the people who need access to key financial information, have it available. It is not enough to name a financially responsible person as executor or power of attorney. Among other things, your executor needs to know what (and where) the assets are, account numbers, phone numbers, user name, passwords and key contacts. For example, if you store your estate documents in a safe deposit box, make sure your executor has access.
  2. Control – We could write a book on the control issues we see with regard to trustees and executors. However, one that is easily missed is the implications of the unintended loss of control in order to avoid estate taxes. In large estates, there are legal devices to take advantage of the $5 million per person (now $5,430,000 with indexing) exemption amount. These devices tend to come with a price: loss of control of the ultimate disposition of the assets and/or restrictions during the surviving spouse’s lifetime.  It is important to not be overly ambitious with tax planning, without a clear understanding of the extent to which the surviving spouse loses some control over his/her remaining lifetime.  By “control” I am not only referring to the assets themselves, but also the ability to name the future beneficiaries of those assets. 
  3. Clear Wishes – If a “wish” is to become a reality, it must be put into writing and planned for. For example, if your wish is for your grand-daughter to have your family heirloom, it must be put in writing AND then put the ring in a safe place – like a safe deposit box. I’m always amazed at how many items disappear between the time of death and the time the executor arrives to secure the assets.  

Wishes don’t just apply to the disposition of the estate assets.  End of life decisions should also be made when everyone is of sound mind.  If you truly do not want to have life support (i.e. feeding tubes or other procedures), make sure your spouse or the person with healthcare powers is clear on this.  Your legal documents (such as a living will) should reflect your intent – even the rationale behind it.  Even burial wishes such as whether or not cremation is an option should be clear to your survivors.

While all of this sounds pretty depressing, there is a positive aspect to estate planning:  There is no better way to honor a loved one (family OR friends) than to include them in your estate planning.  Even token gifts that may be a small part of your estate may be very meaningful to a recipient.  This is the best part of estate planning.  By planning well, it can be like a kiss from your spirit to someone who made your life on earth a bit more joyful. 

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by The Arkansas Financial Group, Inc.-“AFG”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from AFG. Please remember that if you are a AFG client, it remains your responsibility to advise AFG, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. AFG is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the AFG’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: AFG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to AFG’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

 

 

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