The law, the markets, your family, and politics are in a more or less constant state of flux. Chances are, you have a team of financial professionals to help you deal with these constant changes, and don’t even think about it! As you work with your tax and financial planners, usually annually, consider including your estate planning attorney in those conversations. Promoting communication among your advisors can help ensure that your estate plan meets all of your needs. Often certain advisors will have a better idea than others about particular areas of your life.
For example, perhaps you are considering purchasing investment property. Many of the news pundits believe that the real estate market is taking an upward turn and you might think it is a good time to purchase a rental property to provide steady income. You will almost certainly notify your tax advisor of the change; you are required to report the rental income you receive on your tax return. However, ensuring that the property is in your trust is an equally important step. Depending on the value of the property and your financing, it may also require changing the way your entire estate plan is written due to estate tax implications.
Alternatively, you may be considering a charitable gift annuity, which can provide steady cash flow and a charitable deduction. However, there are other alternatives that could leave a legacy, such as an IRA plan wherein you provide lifetime income to your children and the remainder goes to charity. You might also consider setting up your own charitable organization or a charitable remainder trust. Only collaboration with your estate planning attorney, accountant or tax advisor, and financial planner can fully assess this type of situation to determine which alternative would be the most appropriate.
Whatever you are considering: having another baby, starting your own business, buying insurance, your estate planning never occurs in a vacuum. Ideally you should create your first version of your estate plan when you have a child or buy a house, whichever comes first. From there, your income, net worth, and priorities will continue evolving. Your plan should always work for you tomorrow; if you would like heroic efforts to keep you alive and, in the event such efforts are unsuccessful, a guardian for your children, then that is what your estate plan should reflect. However, as your children grow or your preferences change, you should update your estate plan to reflect those new realities and preferences, just as you regularly plan your financial life when circumstances evolve.
Your financial advisor and your tax advisor can help your estate planning attorney come up with solutions that meet your needs at any stage of your life. Similarly, your estate planning attorney can work with your financial and tax advisors to ensure that you have access to your money if you need it, tax breaks now or in the future, and an effective plan to deal with whatever comes your way. With a complete picture, we can all ensure that your retirement, end of life care, health care, and tax goals are met.
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