Estate planning attorneys often assist people in the middle of a family crisis, which can be stressful. Making reasoned decisions is much easier and far less stressful when you are not facing a crisis. Therefore, the following outlines 10 steps that you should take to plan for your future, reduce stress during crisis and ensure that your wishes are being honored.
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. A typical estate plan consists of a will or a revocable living trust, power of attorney, an advance directive and medical authorization. However, because everyone's situation is unique, it is important to consult with an attorney to create an estate plan that is tailored to your specific needs.
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/or the trustees of your estate and, if you have minor children, those you have named as guardians, to ensure that those named 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. Review and update your beneficiary designations on all your retirement plans and life insurance policies. You may have named people who are no longer living or should not receive benefits directly. For example, 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 upon your death.
- Prepare an Oregon Advance Directive. Complete an Oregon advance directive. This document appoints 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 this document 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 also 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 attorney who specializes in 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. Starting January 1, 2025, each person can gift the annual exclusion amount of $19,000 per individual, per year, 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. 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 2025, the federal estate and gift tax exemption is $13.99 million per person. This federal exemption has a maximum tax rate of 40%. 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 on your adult child’s behalf without your child's 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.