Estate Planning Awareness Month is Here
October is Estate Planning Awareness Month, which reminds us that the #1 myth about estate planning is that it’s only for the wealthy. In fact, estate planning is for anyone who owns assets or has loved ones who depend on them. This month is a great time to reflect on the importance of organizing your affairs to protect your loved ones and ensure your wishes are honored.
Why Estate Planning Matters
As we approach 2025, it’s important to remember that the current estate tax exemption is set to expire at the end of the year, reducing to about half of what it is now. With these significant changes ahead, this is the perfect time to revisit your estate plan and explore strategies such as life insurance and trusts to safeguard your legacy.
In 2017, Ted, a retired city employee, was diagnosed with prostate cancer. A husband and father of two grown children, it was a shock to his system. But it was the trigger that motivated him and his wife, Cathy, a retired teacher, to ensure their affairs were in order. Seven years later, Ted’s health deteriorated, his cancer spread and ultimately, he lost his battle. Cathy and her children were devastated. But as they discussed what arrangements needed to be made, they realized that everything had already been done. Ted had given them one final gift before he passed – relief.
Estate planning ensures your assets are distributed according to your wishes, providing peace of mind for you and your loved ones in the event of incapacitation or passing. It also helps facilitate a tax-advantaged transfer of assets, avoiding delays and complications.
Key Legal Documents to Consider
- Will – Specifies how your assets will be distributed and who will care for your children. Without one, the courts and state laws dictate the outcomes.
- Trust – Expedites asset distribution, potentially bypassing probate, and can keep your affairs private.
- Power of Attorney (POA) – Grants someone authority to make financial or medical decisions if you become incapacitated.
- Living Will – Outlines your preferences for medical treatment and end-of-life care.
Life Insurance and Trusts: A Smart Strategy
With upcoming changes to the estate tax exemption, life insurance and trusts can offer valuable tax advantages. Life insurance provides tax-free liquidity to cover expenses, while trusts protect assets from estate taxes and help streamline asset distribution.
Key Considerations Before 2026
In 2026, the estate and gift tax exemption will decrease. For families facing potential tax liabilities, it might be beneficial to transfer assets sooner rather than later. We recommend consulting your estate attorney or financial professional to explore your options.
Common Estate Planning Mistakes to Avoid
- Not having an estate plan at all
- Failing to update your plan after major life events (e.g., marriage, birth, divorce)
- Not communicating your wishes clearly or naming only one beneficiary
A regular review of your estate plan every 3-5 years ensures your documents reflect your current wishes.
Let’s Ensure Your Plan Is Ready
With significant tax changes on the horizon, now is the time to ensure your estate is protected. As Benjamin Franklin said, “By failing to prepare, you are preparing to fail.”
If you’d like to discuss your estate plan, we’re here to help. You can’t predict what will happen tomorrow. Schedule a time to create or review your plan today.
