Why it families pays to think big about estate planning before the end of this tax year
Big Estate Planning Idea Number One:
Review all wills, trusts, and related estate planning documents and prenuptual agreements ASAP.
Reviewing estate plans must also include a review of the related matters such as the title to property (who owns what outright or jointly) since improper titling might make the best drafted documents invalid. For example, if your wills contain trusts to be funded when one spouse dies but all of the assets are jointly owned, the plan might not work as expected, or at all. You must also review your IRA, 401(k), life insurance, and other beneficiary designations to make sure that they are correct. Are children and heirs direct beneficiaries? Should they be or should the assets go into a trust?
And, while this type of review probably should have been done long before now, it is not too late. And, because the federal estate tax is about to come back with a vegance, and to apply to more families than ever before, reviewing these matters is vitally important for all families and for those with children from more than one marriage.
Reviewing pre and post nuptual agreements is also important. To quote the attorney Steve Leimberg, "Such agreements could be ticking time bombs if they are not reviewed." Why? Many of these agreements made assuptions about the net worth of the parties, and their estate plans which may no longer be valid. Ultimately courts could choose to void them, if it turns out one spouse fails to receive the “benefit of the bargain” because of a changed tax law nobody realistically contemplated when the document was drafted.
In short, before deciding to take any more elaborate planning actions, a review of your existing financial situation, your existing estate planning documents, and the beneficiary designations in your planning is essential to avoid serious problems in 2011.
David M. Frees III
David Frees is an attorney practicing in the areas of trusts, estate, probate and estate planning. He has law offices in Malvern, Phoenixville, and West Chester which serve the surrounding clients in the counties of Chester County, Montgomery County, Deleware County, Lancaster County, and Berks and Bucks Counties.