Article: "Rethink Your Legacy"

Time to Rethink Your Legacy

An article in the June 2009 issue of Money magazine entitled, "Rethink Your Legacy," which I am sure will be widely read, points out the need to review estates given the fact that with the current economic downturn, most people have a smaller net worth. The article asks five issues that the typical family might face.

First, give it now or later? With the greater annual gift tax exclusion now at $13,000 per person and the reduced value of assets, those individuals who can afford it can now give away more to their family members without incurring any gift tax.

Second, equal or "fair"? Except in unusual circumstances, such as a special needs child or a business interest, it is best to divide assets equally among their children. Even though one child may be in a better financial position than another at the current time, conditions can change.

Third, a simple or complicated estate plan? Most individuals can get by with a simple estate plan, but if they need to consider taxes, are in a second marriage, or require certain provisions for their children, different types of estate plans can be of significant benefit. One issue that was not mentioned in the article, however, was the benefit of bequeathing a child’s inheritance through a spendthrift trust to protect them from spouses in the event of a divorce or creditors’ claims. Given the current and even future financial environment, this type of trust makes sense for many.

Fourth, thinking of giving to charity? Remember that each person, or if you are an advisor your clients, need to be careful when they use retirement plan money for charitable bequests so that they do not create income tax problems for your heirs.

Fifth, when to revisit your plan? Obviously, individuals cannot put their estate plans on the shelf and forget them. If the past year has taught us anything it is that economic conditions can change drastically in a short time. Even the best of plans can rapidly become obsolete. The article recommends that individuals contact their attorney every three years or so to review their estate to see if it needs updating.

I suggest that you, or your clients, peruse this article to determine if their estates need updating. We would be happy to review the estates of those individuals whose circumstances have changed since the plan was prepared and update their documents to comply with current rules and regulations and financial circumstances.