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Caring For Generations

Don’t Bequeath a Device Without Operating Instructions

by | Oct 5, 2022 | Directives, estate administration, estate and tax planning, Estate Planning

“At Home-Tech Appliance Center, we hear the same sad tale over and over again. People inherited a kitchen full of old appliances that they just don’t know how to use or properly care for.”

Josh Golding, writing in U.S. News, thinks the same problem applies to your drawer-ful of estate planning documents. Sharing your plan with your kids and going over the “operating instructions” could make a big impact on your legacy for a variety of reasons, he says:

  • Sharing details about financial institutions you work with and the titling of the various accounts ensures accounts are not forgotten and bills get paid when you are not around.
  • Many people name trustees or executors, but they never discuss those roles to make sure each designee understands what’s involved and is comfortable taking on those duties.
  • Many adult children do not have the same experience dealing with issues that wealthy retirees face. Concepts such as nonqualified accounts and step-up in cost basis and life insurance proceeds might be confusing for an adult child who is handling your estate.

At Geyer Law, we know that changing tax laws make it even more important for adult children to
understand the workings of their parents’ estate plan. As just one example, when the SECURE Act was signed into law in December 2019, it made important changes in the rules for inherited IRA accounts. Because some provisions had been left open for interpretation, in February and then again in May of this year, the IRS issued proposed regulations to clarify the way beneficiaries are required to treat inherited IRA assets.

When it comes to including adult children in the estate planning process, however, Amelia Donovan, writing in Legacy Assurance Plan, issues an important caution: “It is critical to remember that it is your estate plan, not your children’s”. So, before inviting the children into the process, she advises, take time to decide what the boundaries are going to be. Sometimes, she observes, children must be reminded they have no absolute right to an inheritance at all!

Topics that definitely should be discussed with adult children, Donovan explains, include:

  • whether they are willing and able to perform the duties you want to assign to them
  • your end-of-life healthcare decisions
  • how you plan to pay for long term care or medical treatment
  • the location of your financial and legal documents

As estate planning attorneys,we know that, along with possible future tax changes, we must also allow for the impact of divorces and remarriages within the next generation. This is one of the many topics we cover with clients to ensure their wishes are carried out following their deaths.

It’s never a good idea to bequeath an appliance – or an inheritance – without proper operating instructions!

– by Ronnie of the Rebecca W. Geyer blog team