This article, “Holidays an Opportunity to Discuss Your Estate Plan”, written by John Grobe and featured in FEDWeek, 12/6/21, was intended for a federal employee audience however, much of it rings true for everyone. I’ve taken the liberty of editing the audience-specific sections. Good reminders for all of us when it comes to keeping our estate plans current.
Many of us will be getting together with family over the upcoming holidays, which is an opportunity to talk. Whether the gathering will be at your home or the home of a family member, we can all agree with Perry Como who sang “There’s No Place Like Home for the Holidays” back in 1954. Since then, the song has been covered by Robert Goulet (1968), the Muppets (1987), Garth Brooks (2000), and many others. I prefer the version (interminably) crooned by Lenny Salvatore in the 1970s, Lenny was a co-worker of mine back when I was a letter carrier. I didn’t like hearing the song then (especially not all morning while we prepared our routes for delivery), but now it has become part of the Christmas season for me and I miss hearing Lenny sing it.
At family gatherings, we will talk about recent family events, reminisce over past happenings, watch a little TV and, maybe, play a board game or two. Talking about money is generally not on the list for family holiday get-togethers – however – depending on which family members you are gathering with, money might be a topic that should be discussed.
Consider talking to your adult children about your estate plan. If you have no formal estate plan, take steps to put one in place. Let your children know what to expect when you (and your spouse) pass on. We have all seen headlines about celebrities (Prince, for example) who die without having an estate plan in place.
Even if you have an estate plan, it may be out of date. Is your former spouse still listed as a beneficiary? You might also have beneficiary forms for outside life insurance, IRAs, and other financial assets. Make sure that those forms reflect your current wishes.
Estate planning decisions that you have made may affect the taxes that your heirs pay after your death. Though it is likely that your estate will fall below the threshold for federal estate taxes, some states have lower thresholds. If you make a mistake in how you designate beneficiaries for an employee plan (e.g., TSP) or an IRA, the account may have to be liquidated earlier than would have been the case had you designated differently.
I’m not suggesting that you invite a tax or IRA professional to your holiday gathering but do be sure to consult with them on items like beneficiary designation. Decisions that made sense before the passage of the SECURE Act may not make sense today.
Talk to your children about their potential inheritance and emphasize to them that it should not be considered a windfall to be spent in a short period of time.
John Grobe wraps up the article with the following piece of advice: “Remember, though it may feel uncomfortable talking about your financial and estate plans, it can make it much easier after your death. Consider using this holiday season to start the conversation.”
To help demystify estate planning, I’m including some basic definitions of common terms often related to estate planning. Once you understand the purpose of each instrument it can help you know if it is something you should consider.
Healthcare Power of Attorney: A legal document that allows an individual to designate another person to make medical decisions for him or her when he or she cannot make decisions for himself or herself.
Living Will: The purpose of this Living Will Declaration is to document your wish that life-sustaining treatment, including artificially or technologically supplied nutrition and hydration, be withheld or withdrawn if you are unable to make informed medical decisions and are in a terminal condition or a permanently unconscious state.
Your General Power of Attorney: (sometimes referred to as Financial Power of Attorney) – these are people you have chosen to manage your financial affairs if you are unable to do so.
Your Trust: Sometimes called revocable trust or living trust. The trust holds and distributes your hard-earned assets during your lifetime and upon your death – as you have designated. A trustee, generally yourself, manages and distributes the trust assets according to the terms you designate in the trust.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate, or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate, or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526). David H. Lefton is an Estate Planning and Probate Attorney. He is a partner in the law firm of Barron, Peck, Bennie & Schlemmer.