Top Estate Planning Considerations for Closing Out 2020

Chambliss, Bahner & Stophel, P.C.

2020, a year full of uncertainty, is coming to a close. Our estate planning and tax team is here to help remove some of the uncertainty and speculation prevalent in today’s environment. Many people believe the holiday season represents a point too far into the calendar to make changes. However, the end of the year can be a convenient time to reflect on major life changes and plan for the future. Here are some helpful tips for you and your family as we approach 2021.

Top Estate Planning Considerations for Closing Out 2020

  • Cash is (possibly) king in 2020: The general rule of thumb to those making charitable gifts is to gift your highly appreciated assets. While gifting these assets may still be a good choice, they are capped at an income tax deduction of 30% of adjusted gross income (AGI). Thanks to the CARES Act, gifts of cash to public charities can now be deductible in amounts up to 100% of AGI for individuals who itemize their deductions. These gifts must be completed in 2020 to receive the 100% deduction. This may be a great way to carry out your charitable giving, while also limiting your income tax exposure.
  • Complete your estate plan: Have you been putting off completing your estate plan because you may need to discuss it with your family or other reasons? The holidays are a perfect time to have these discussions, finalize the details, and set your plan in motion. As you are reflecting on 2020, consider these important life decisions.
  • Review your estate plan: When circumstances change in your life, make sure they are reflected in your estate plan. Most estate planning documents are able to be updated to conform to these changes. Why not take advantage of this? You should review your documents at least every three years to make sure they are up to date, or when you experience a major life event such as marriage, welcoming a child or grandchild, etc.
  • Review your account ownership: While your estate planning documents may not determine how these accounts are transferred, they are an important piece of the puzzle. This includes joint owner or pay on death beneficiaries, and the primary and contingent beneficiary on your life insurance and retirement plans. These accounts and plans should be reviewed every time you review your estate planning documents.
  • Discuss your incapacity documents with your family: Everyone should have incapacity documents that designate an agent to make health care and financial decisions for you if you are unable to make the decisions yourself. This includes an Advance Directive for Health Care that allows you to determine your treatment preferences. Make sure to discuss your wishes with your loved ones and keep these documents in a safe place. Do not forget to let your loved ones know where to find these documents and provide copies to your agent(s).
  • Consider obtaining life insurance: Life insurance is an important tool. If something tragic were to happen to you, life insurance can help your family reduce the struggle to replace your income during an already difficult time. If you have dependent children or others who rely on you, this may be a necessary step to make sure they are protected.
  • It is never too late to make your 2020 charitable gifts: Do you think you have waited too long to make your charitable gifts? There is a good chance that you have not. A promise to make a gift, in some instances, can satisfy the requirements of a present gift. There is still time to make gifts this year.

As you prepare for the holiday season, consider creating, reviewing, or updating your estate plan before the end of the year.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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