New Year, New Order: Putting Your ‘House’ in Perfect Shape
As the crisp, fresh pages of 2024 open up before us, it’s a great time to reflect on the past, envision the future, and take decisive action in the present. This is not just about buying a new calendar or making New Year’s resolutions. It’s also a perfect time to step back and ensure your “house” – in this case, your financial and estate affairs – are in order.
Start with a Document Detox
A cornerstone of effective estate planning is having a solid organizational system. This extends from physical papers to electronic documents, passwords, and everything in-between.
Think of it as doing a spring cleaning, only in the heart of winter. Begin by locating all your relevant paperwork and digital records. This may include wills, trusts, power of attorney documents, insurance policies, bank and investment account statements, mortgage or loan records, and more. Once gathered, create a filing system that makes sense to you and the people who might need to access these documents in the event of an emergency.
Reflect and Reevaluate Your Beneficiaries and Fiduciaries
The beginning of a new year is an opportune time to review and, if needed, modify your beneficiaries and fiduciaries. A lot can change in a year. Loved ones may come into or pass out of your life. Your relationships might evolve, or your trust in individuals may shift. All of these can lead you to reevaluate who you want to bequeath your assets to or who should act on your behalf if you are unable to do so.
For example, your will, life insurance policies, retirement accounts, and other instruments may name beneficiaries. Make sure those designations are still in line with your wishes. Similarly, if you’ve named fiduciaries in documents like a power of attorney, advance healthcare directive, or your will (as your executor), confirm that those people are still willing and able to perform those duties.
Foster Open Conversations
The old adage, “communication is key,” remains a timeless truth, especially in estate planning. While discussing estate plans can be delicate, having open conversations about your intentions can minimize potential disagreements or misunderstandings down the line.
It might be beneficial to hold a family meeting, where you can express your wishes and explain your decisions to your beneficiaries and fiduciaries. Such conversations can also help your beneficiaries understand their roles and responsibilities, ensuring a smoother transition when the time comes.
Get Ahead of Tax Day
With the arrival of the new year, Tax Day is just around the corner. It’s never too early to start preparing for it. As you organize your estate, also compile financial documents that you’ll need for tax filing. These may include W-2s, 1099s, receipts for deductible expenses, and records of any charitable contributions.
Additionally, consider meeting with your Certified Public Accountant (CPA) early on. They can provide guidance on potential tax-saving strategies, changes in tax laws for the year, or ways you might leverage your estate planning for tax benefits.
In conclusion, while the new year is often seen as a time for personal resolutions and fresh starts, it can also be a period of great productivity in terms of organizing your financial and estate matters. Your ‘house,’ when well ordered, becomes a stronghold of wealth preservation and a beacon of clear intention for your beneficiaries and fiduciaries. So, as we welcome 2024, let’s ensure our houses are in order and our futures, well planned.