As an estate planning and elder law attorney, I often assist people in the middle of a family crisis which can be stressful. It is much less stressful to make well-reasoned decisions when you are not facing a crisis. Therefore, the best way to plan for your future, reduce stress and be prepared is to ensure that you have taken the steps described below.
- Prepare Your Estate Plan. If you do not have an estate plan, now is the time to create one. The beginning of the year is a great time to discuss who would make decisions for you and take care of your loved ones if you cannot do so. Additionally, most people should have a will or a revocable living trust, and power of attorney, advance directive and medical authorization as part of their estate plan.
- Review Your Existing Estate Plan. If you already have estate planning documents, review your existing plan. Circumstances may have changed during the previous year. It is a good time to review the personal representatives (executors) and trustees of your estate to make sure that they continue to be the best choice. Additionally, you should review the named recipients of your personal property and other assets to determine if your bequests still reflect your intentions.
- Update Your Beneficiary Designations. You should review and update your beneficiary designations on all your retirement plans and life insurance policies. You may have named persons who are no longer living or should not receive benefits directly. Some people may lose their state assistance such as Medicaid or other benefits if they receive a portion of your life insurance or retirement policies.
- Prepare an Oregon Advance Directive. Complete an Oregon advance directive to appoint health care representatives who can make medical and other health care decisions for you if you cannot make decisions for yourself. If you wait to execute these documents until a later date, you may not be able to advise your health care representative of your wishes in the case of end of life decisions. You should provide a copy of your completed advance directive to your primary care doctor and the hospital as well as your health care representatives.
- Review Your Monthly Income and Expenses. Review your monthly income and expenses to ensure that you can meet your expenses or have a plan if you need to supplement your monthly income. It is important to review not only your current expenses but future expenses should you need additional care or if there is a change in your living situation. Additionally, if you have limited assets and income or are using your reserves quickly, you should consult with an elder law attorney regarding Medicaid planning. If you are likely to need Medicaid in the future, you should not be gifting any of your assets to other people.
- Make Tax Free Gifts. In 2021, each person can gift the annual exclusion amount of $15,000 per year to other individuals without any gift tax consequences. If you have an estate worth more than $1 million, this is a great way to transfer wealth to your loved ones while ensuring that you will reduce your estate below the current Oregon estate tax level. However, if your asset has a low tax basis, check with your accountant to determine any possible tax consequences before gifting.
- Review Your Insurance Policies. Review your insurance policies to make sure that you have necessary coverage. Often you are paying for insurance that you no longer need or need insurance that you do not have. The beginning of the year is a great time to review your policies with your agent including options for long term care insurance.
- Plan for Estate Taxes. For 2021, the Federal estate tax exemption amount is $11.7 million with a maximum tax rate of 40% and the Oregon estate tax exemption amount is $1 million with a tax rate of 10 – 16%. The ability to maximize your exemption amounts and other planning options should be reviewed with your estate planning attorney.
- Unmarried Children’s Documents. You should encourage your unmarried children who are over 18 to obtain legal documents such as a power of attorney, advance directive and a will since you are unable to act upon your adult child’s behalf without his or her consent or a court order. This can be difficult if your child is injured or otherwise in need of assistance. Additionally, if you are concerned about your child’s inheritance, you can suggest that your child obtain a prenuptial agreement before getting married to protect the assets that the child will inherit.
- Have a Family Meeting. Discuss your plan with your family or with the person you have nominated to take care of you or your property in the event of illness or death. Make sure that person knows your wishes and where to find your important documents.