Death, taxes, and our fingers are a few things we can count on. As for the former, taxes will be owed and death is certain. In knowing a tax bill will be due on April 15th annually, we as a general population pay withholding through payroll and Social Security deductions, IRA distributions, and quarterly estimates. We plan throughout the year to be better prepared for when our CPA tallies the numbers.
Like owing tax, death is a life event that is inescapable. If so, why are we so reluctant to make plans for the inevitable? If we can put plans in place today to make our “expiration date” easier on our loved ones and friends, why not divide and conquer, perhaps in a quarterly manner. Consider making the next four quarterly payments to your estate plan.
Quarter 1 – Top of the planning list is to review or have estate planning documents prepared. A standard package contains: a Will, a Durable Power of Attorney, a Medical Power of Attorney, and a Directive to Physicians document. Your Last Will & Testament is the only document in the basket that will be used post-mortem. By writing a Will, you can designate an executor to follow through with your post-life intentions. Among other things, a Will can also be used to designate an individual(s) to serve as a legal guardian for your minor children (this can also be done in a separate document so you don’t have to change your Will every time you change guardians). Although it may seem like many small words printed on legal sized paper, this is an important tool to direct the disposition of your assets and make important designations. I have joked that an estate planning package would make a great birthday or anniversary gift for a parent or spouse, since it is a relevant, purposeful tool for all! Any local attorney offer gift cards?
Quarter 2 – Something that may bring peace or comfort to your family is knowing explicitly of your wishes. Open communication is a great start, but jotting these wishes down can be of utmost importance during the preparation of your final arrangements once you have passed. Consider documenting your burial arrangement preferences, information for your death certificate or obituary, organ donation considerations, pet or livestock care instructions, location of important papers and financial information, just to name a few. Finally, after you have thought and documented, let your future executor know of these personal wishes and where you’ve left these memos.
Quarter 3 – This quarter take a break and do a fairly easy estate planning task. Review and update the beneficiaries listed on your applicable accounts. A few assets or accounts that typically have a beneficiary designation may include your employer sponsored retirement plans, IRA accounts, an account with a Transfer or Payable on Death designation, and life insurance policy(ies). This is a simple way to divide assets to your heirs that supersedes your written Will.
Quarter 4 – Part of your estate planning may involve creating a legacy that can extend to future generations. Your goal may be charitably inclined. You may wish to leave grandchildren a bequest. You might like to pass your beloved vacation property to the next generation. If you have a unique goal, trusts are tools that can allow you to individualize your estate plan in specific ways to reach your goals. If you wish to leave a legacy, a trust may be helpful in seeing that it happens.
As systematically as you make payments to the IRS, pay into your post-life planning. Be prepared for the very much expected, taxes and death.
Published in the Victoria Advocate
Beth Koonce is a CFP® professional for KMH Wealth Management, LLC.