Organizing for Tax (and Estate Planning) Season

This year’s April 17th IRS filing deadline is just around the corner. You’ve probably been receiving tax forms such as your W-2 or 1099s over the last few weeks. You may also be thinking about life events that occurred last year that could affect your taxes in various ways.

This flurry of tax prep activity is the perfect opportunity to get your estate plan in order.

Why? Because as you run down your list of “tax prep” questions, you will find that your answers could also impact your estate plan.

Some things to think about:

• Did you or any of your children or grandchildren get married or divorced?​
• Did you welcome a child or grandchild into your family by birth or adoption?
• Have any of your children or grandchildren reached the age of majority?
• ​Have you dealt with illness or hospitalization? Have you incurred medical expenses?​
• Did you buy or sell a new property or any other major assets, like a vacation home?
• Did you move to another state?
• Did you buy, sell, open, or close a business?
• Have you made any charitable donations?
• Do you have any new life insurance or pension plans?

After you’ve answered these questions, you should gather the corresponding paperwork. That might include deeds, policies, and contracts as well as bills and receipts. Having all of this information on hand can help you prepare your tax forms and create or update your estate plan.

Here’s how your tax-related changes can affect your estate planning.

If you already have an estate plan, your number one goal is to make sure everything still represents your wishes, taking into account the past year’s events. Maybe because of a change in circumstances, you need new or updated estate planning documents. Perhaps it’s time to update who will serve as the executor of your Will or trustee of your Trust, or maybe you need to update beneficiaries because of births or deaths. Or, if you’ve had a change of heart about who should inherit from you, you also need to update your plan.

If you don’t have an estate plan, having this information at your fingertips sets you up for a productive conversation with your estate planning attorney. After reviewing your planning goals, your lawyer can draw up key documents, such as:

• A will. Among other things, this document can ensure that your wishes—and not the laws of the state—determine how to distribute your estate.
• A revocable living trust. In addition to a will, you can establish a living trust, which allows your estate to bypass the potentially long and costly probate process upon your death, gives you extra privacy, and helps to avoid the potentially costly guardianship or conservatorship court process if you become incapacitated.
• A living will. This document expresses your desires regarding life-sustaining medical treatment, if you become incapable of communicating your wishes.
• A durable power of attorney. This appoints someone to step in and take over your financial affairs if you are unable to do so, reducing the possibility of hard feelings among loved ones or the need for court intervention.

Since you are working on your taxes anyway, take a few extra moments to get the ball rolling on your estate plan as well. By getting organized in this way, you’ll be well on your way to making 2018 an amazing year.

Are you ready to develop a comprehensive estate plan designed to achieve your goals and protect your family? I would love to help you and your family. Please contact me at 423.667.2906 to schedule an appointment. I look forward to working with you!