- Consider year-end gifting and tax planning options with your advisors. One option is to make charitable gifts of appreciated assets (which have been held for more than 1 year) to charities or to a Donor Advised Fund. If you are over 70½, one generous move is to make gifts directly from your traditional IRA to religious institutions and certain other qualified charities in satisfaction of your annual Required Minimum Distribution. Such gifts from IRAs do not generate charitable donation deductions, but the amount given is excluded from taxable income up to $100,000 per individual and $200,000 per married couple.
- If the SECURE Act becomes national law in the future, a 10-year IRA payout will be required for many non-spouse beneficiaries. Exceptions may allow payouts over longer periods of time for a surviving spouse, minor children, beneficiaries who are less than 10 years younger than the account owner, and disabled persons. In any event, consider converting traditional retirement accounts to Roth accounts (and other strategies) with your financial advisor and accountant.
- Now is a good time to check to be sure your current choice of post-death beneficiaries has been signed by you and acknowledged by your life insurance provider, annuity underwriter, and/or retirement account custodian.
- How you title to property and name beneficiaries governs what happens to assets upon death. If you don’t have a will, Illinois law requires distribution of assets between your spouse and children (or closest relatives if single and no descendants). A living trust can provide for you and your loved ones on your disability and death in the manner you choose without the need for unnecessary income tax, estate tax, probate court involvement, costs, delays, fees, and risks of litigation. When combined with a “pourover” will, assets pass in the manner you direct at your death.
- Be sure your will, living trust, and powers of attorney set forth your current wishes. If you have a living trust, continue to “fund” the trust by re-titling certain assets into your name as trustee of your living trust.
- If you live in Illinois and the combined value of your estate and your spouse’s estate is under $4,000,000, consider updating your living trust to make the credit shelter trust (a/k/a “family trust” or “bypass trust”) optional at the death of the first spouse to die. This can preserve the “step-up in basis” for many assets which pass from a decedent and save substantial income taxes upon sale of the assets.
- At the start of 2020, Illinois will join 34 other states and the District of Columbia to adopt a modified version of the Uniform Trust Code. You will need to update to your trust provisions if you want to protect loved ones from claims of creditors upon your death or if you want to limit information which must be shared by your trustee with contingent beneficiaries after your death.
- Some simple asset protection strategies include purchase of an umbrella insurance policy (to increase liability coverage limits for homes and vehicles), life insurance payable to family upon death, and long-term care insurance.
If you have a corporation, continue to sign annual consents at least annually and timely file required annual reports. Contact us or another lawyer who you choose to discuss changes in law and updates to your documents. We will be happy to talk with you, your family, or friends about legal matters.