Improving Your Finances

0 Like Like
About the Author
Christine Benz is Morningstar's director of
personal finance and author of 30-Minute Money
Solutions: A Step-by-Step Guide to Managing
Your Finances and the Morningstar Guide to
Mutual Funds: 5-Star Strategies for Success.
Follow Christine on Twitter: @christine_benz and
on Facebook.
Contact Author | Meet other investing specialists
5 Estate-Planning Tasks That You Shouldn't
Put Off
The estate tax might be in flux, but that doesn't mean you should
throw these important to-dos on the back burner.
By Christine Benz | 01-25-13 | 06:00 AM | Email Article
Keeping tabs on the estate-planning rules during the past few years has been a
little like watching Olympic-level table tennis: The action moves quickly, and it's
difficult to keep up.
The amount of assets that
could pass estate-tax-free
drifted upward for most of the
2000s, and the estate tax went
away altogether in a single
year, 2010. Extremely
generous exclusion amounts,
which allowed estates valued
up to just over $5 million to
escape the estate tax,
prevailed for 2011 and 2012.
The estate tax was set to return with a vengeance starting this year as part of the
Most Active Stocks
Ticker Price($) Change(%)
Morningstar
Rating
Morningstar
Analyst Report
FB 60.01 -1.57
SIRI 3.16 0.96
CSCO 22.33 1.41
ZNGA 4.42 -1.12
MSFT 40.30 2.39
GILD 68.55 -4.01
BAC 16.98 -0.18
PLUG 6.90 0.15
MNKD 4.83 -7.12
VALE 13.68 0.22
With Morningstar Analyst reports you can get our expert Buy/Sell
opinions on over 3,900 Stock and Funds
Print Comment Recommend (4)
Video Reports
Welcome, sundar!
Company Site Log Out Premium
Membership Portfolio Stocks Bonds Funds ETFs CEFs Markets Tools Real Life Finance Discuss Home
5 Estate-Planning Tasks That You Shouldn't Put Off http://news.morningstar.com/articlenet/article.aspx?id=582127
1 of 4 3/30/2014 7:57 AM
Stocks by: Name | Ticker | Star Rating| Market Cap| Stock Type | Sector | Industry
Mutual Funds by: Star Rating| Investment Style | Total Assets | Category | Top Holdings | Top Sectors | Symbol / Ticker | Name
ETFs by: Star Rating| Category | Total Assets | Symbol / Ticker | Name Articles by: Title | Date | Author | Collection| Interest | Popularity
Investment Categories by: Topic | Sector | Key Indicators | User Interest | Market Cap| Industry
Premium Stocks by: Name | Ticker | Star Rating| Market Cap| Stock Type | Sector | Industry
Premium Mutual Funds by: Star Rating| Investment Style | Total Assets | Category | Top Holdings | Top Sectors | Symbol / Ticker | Name
Premium ETFs by: Star Rating| Category | Total Assets | Symbol / Ticker | Name Popular Articles by: Title | Date | Author | Collection| Interest | Popularity
Popular Investment Categories by: Topic | Sector | Key Indicators | User Interest | Market Cap| Industry
so-called fiscal cliff, but the recently enacted tax package extended the generous
estate tax laws. The estate tax exemption will remain up to just more than $5
million per individual (that amount will be inflation-adjusted), and the top estate
tax rate will increase to 40% in 2013 from 35% in 2012.
Contemplating your own mortality or incapacity, as estate planning requires you to
do, is off-putting under the best of circumstances. And the constant flux in the tax
code no doubt makes estate planning even easier to put on the back burner. After
all, setting up an estate plan can be costly, and many people, especially younger
folks, probably worry that they'll fork over a lot of money only to have to revise
the plan when the laws change again.
Even though the estate tax exclusion amount remains very high, the core estate-
planning to-dos are actually pretty evergreen and don't have anything to do with
the tax regime. They could, however, have an extraordinary impact on whether
your wishes are carried out before and after you die.
Here are the key estate-planning to-dos.
Task 1: Update Your Beneficiary Designations
Even if you've never set foot in an attorney's office, you've laid the groundwork for
an estate plan if you've filled out beneficiary designation forms for your financial
accounts. Those designations, in fact, trump other estate-planning documents
Most Popular
6 IRA Mistakes to Avoid
Top 10 Dividend-Yielding Stocks of Our Ultimate Stock-Pickers
Morningstar Medalists That Are Easy to Own
Where to Find a Margin of Safety
Stock Funds: The 5-Year Rally's Big Winners
Corrections Help Advertising Opportunities Licensing Opportunities Glossary RSS Mobile Portfolio Affiliate Careers Company News
International Sites: Australia Canada China France Germany Hong Kong Italy The Netherlands Norway Spain U.K. Switzerland India Finland
Independent. Insightful. Trusted. Morningstar provides stock market analysis; equity, mutual fund, and ETF research, ratings, and picks; portfolio tools; and option, hedge fund, IRA, 401k, and 529
plan research. Our reliable data and analysis can help both experienced enthusiasts and newcomers.
Copyright 2014 Morningstar, Inc. All rights reserved. Please read our Terms of Use and Privacy Policy. Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market
Barometer) quotes are real-time.
More Videos...
Site Directory Site Map Our Products
5 Estate-Planning Tasks That You Shouldn't Put Off http://news.morningstar.com/articlenet/article.aspx?id=582127
2 of 4 3/30/2014 7:57 AM
when it comes to distributing your assets, so it's worthwhile to periodically review
them to make sure they're up-to-date with your current situation--if you've gotten
married or divorced, or example. (How would your spouse feel if you inadvertently
left your 401(k) account to your brother?) And if you have drafted estate-planning
documents such as a will, your attorney should be able to help you review your
beneficiary designations to ensure that they sync up with those documents. This
article provides guidance on beneficiary designation dos and don'ts.
Task 2: Designate Legal Guardians
Here's another step that's important regardless of asset level: Parents of young
children should designate legal guardians who will look after their children if the
parents should die or otherwise be unable to care for their minor children. Spouses
often put off this step because they disagree about guardianship, but it helps if you
can focus the discussion on actual child-rearing abilities and willingness to do the
job. Don't get hung up on hurting anyone's feelings or bypassing friends or family
members who might expect to be your guardians but aren't the best choice.
(Naming someone a guardian because you're a guardian for their children isn't a
good reason.) Most important, your guardian should be willing and able to take
care of your children if the need arises, so an essential step is to discuss the
responsibilities with the potential guardian and make sure he or she is on board.
You also want your children's guardian to share you and your spouse's values and
views on parenting; financial wherewithal should be a consideration, as well. It's
also worth noting that it's possible to name two guardians--one to take care of
your child's needs on a day-to-day basis and another to supervise the child's
financial assets. But that's usually not practical for obvious reasons.
Task 3: Create a Living Will and Last Will and Testament
A living will is another document that's important no matter what your asset level
is; it tells your health-care providers and your loved ones how you would like to be
cared for if you should become terminally ill and unable to express your wishes
yourself. Called a "medical directive" in some states, this document details your
views toward life-support equipment. Not to be confused with a living will, a last
will and testament details how you'd like your assets and possessions distributed
after your death.
Task 4: Draft Powers of Attorney
Estate planning doesn't just relate to death and dying: A basic estate plan should
also address what would happen to your affairs if you are still living but
Click here to view all
Related News
Also in Investing Specialists
Buy a Link Now
Sponsored Links
5 Estate-Planning Tasks That You Shouldn't Put Off http://news.morningstar.com/articlenet/article.aspx?id=582127
3 of 4 3/30/2014 7:57 AM
Add a Comment
Email me new replies.
Post
incapacitated. A power of attorney is a document that specifies who will handle
your affairs if you are unable to do so. You'll need to draft two separate
documents: one that names your power of attorney for health-care decisions and
another for financial matters (often called a durable power of attorney). The
person you entrust with your power of attorney for health care will, ideally, live in
close geographic proximity to you and will also understand your general wishes
about your own health care. The person who you name on your durable power of
attorney form should be detail-oriented and comfortable with financial matters,
and he or she should also have a general understanding about your attitudes
toward and goals for your money.
Task 5: Name an Executor
Your executor will gather all of your assets after you're gone and make sure they
are distributed in accordance with your will. Ideally, your executor will be someone
who's comfortable with numbers and good with details, and will also be able to find
the time to work on your estate. It's common to name family members as
executors, but in more complicated situations it might be preferable to use a
professional, such as a bank trust officer, to serve as your executor. It's a good
idea to tell your executor that you've named him or her, and also provide details
on how to obtain access to important documents, such as your will and a master
directory detailing all of your accounts.
A version of this article appeared Aug. 20, 2012.
See More Articles by Christine Benz
5 Estate-Planning Tasks That You Shouldn't Put Off http://news.morningstar.com/articlenet/article.aspx?id=582127
4 of 4 3/30/2014 7:57 AM