End-of-Summer Checklist: 6 Financial Considerations and Annual Maintenance Reminders

Last year, we created an end-of-year list of some financial considerations and annual maintenance items that clients should consider. As fall approaches, we want to revisit some of those items while also outlining some additional considerations which may require more time and effort to address.

1. Prepare and/or Revise Your Personal Inventories

We often advise new clients to create personal inventories both for intangible assets (listing institutions where financial assets are maintained; collecting the names of and contact information for business/financial advisors, tax preparers, and estate planning attorneys; and creating a record of personal log-in information for online accounts) as well as for tangible personal property (especially where specific items are intended to be left for specific individuals).

As you can imagine, these inventories are only as helpful as their most recent update, so it is important to periodically review and update this information, so that your family has access to the information when they need it. The end of summer is a great time to check in with these inventories and update things before schedules fill up with school, sports, and holidays.

2. Consider a Family Meeting with Your Adult Children

If you have started naming your adult children to certain roles in your estate planning documents, it is important to let them know where to find these documents and who to contact if anything should happen to you. This conversation may help relieve anxiety that adult children have about caring for their parents because your children will know that you have created a plan and taken steps to ensure that these decisions do not solely rest on them.

If you start these discussions, you are by no means required to share all the details of the documents and your decisions. In fact, many clients prefer to start these conversations slowly, by first telling their adult children where to find things in an emergency, and who to contact for more information. However, once you and your children are more comfortable with the process, we often encourage clients to discuss the roles where a child is named and responsibilities associated with that role, so that the child knows what may be expected. This often creates an opportunity to have deeper discussions about your wishes and intentions. While the foundational documents themselves provide a lot of information for your children, the conversations that you have with them often provide context and guidance. Ideally, this means that if your child is asked to act on your behalf, he or she is better prepared to make decisions for you.

When you have a family business or foundation that you hope to leave to your children, these family meetings offer an invaluable opportunity to discuss your intentions and goals for that family organization. While your children are younger, these meetings may allow you to start speaking with them about the organization itself and its importance to the family. Over time, the conversations will eventually guide them into the future – so that your children not only understand the current operations and needs, but also so that they can begin to learn what it takes to keep things running smoothly in the future. Ultimately, as your children become more familiar with the organization, these meetings can provide an opportunity to get your children involved in decision-making while you are able to guide them well before any official succession planning begins for the business or foundation.

3. Ensure Your Adult Children Have the Power of Attorney and Advanced Directive Documents in Place

While your child may still be on your health insurance for some time, once they are 18 years old, they are legally an adult. This means that you, as their parent, no longer have the same legal rights to receive information as you had on the day before their 18th birthday.  Whenever a child reaches 18, we recommend that clients discuss with their children the importance of having Power of Attorney and Advanced Directive documents.  By having these documents in place, and assuming your child chooses their parent(s) as the agent(s), you will be able to continue receiving financial and medical information for your child so that you can help your child as they navigate their new adulthood.

When a child is moving out of state, whether they are leaving for a new semester at school or heading out to begin their careers, we may also recommend that they not only have these documents prepared under the laws of their home state and permanent residence, but also under the laws of that second state where they will be spending more of their time.  While this is not strictly required as the first set should be effective in the new state, having this second set of documents could be helpful if there is an emergency where time is of the essence.

4. Create or Review 529 Plans for Your Children or Grandchildren

While you may not be heading back to school yourself, your children and grandchildren may be preparing for a new school year. If you have not yet created a 529 plan, or if you have opened an account but are still funding the plan, those “back to school” signs may serve as a gentle reminder to add to these tax-advantaged plans. Even if you have fully funded all your 529 plans, make sure that you review the investment portfolio periodically to ensure that the 529 plan assets will be sufficient to pay the rising tuition costs for that child or grandchild.

5. Start Early with Year-End Gift Planning

If you make a habit of maximizing your annual gifting, or if you intend to start doing so, beginning the process now is ideal.  Starting early is especially important if you are making gifts of business interests or other assets which require appraisal reports or valuations, or if you need to create a new trust agreement for these gifts.

Business interests should be valued as near as possible to the time that the gift will be made, but valuations and appraisals of these interests often take time. And if your business is considering or nearing a liquidation event, these gifts are often best made sooner rather than later to maximize the impact of your gift while minimizing the use of your lifetime gift and estate tax exemption.

If new trust agreements are needed, it is best to start the process earlier in the year so that you have time to review the provisions and become comfortable with the new arrangement. This is especially true if you have not used trusts before as there are several tax implications to consider in addition to the distribution provisions. Trusts which are created for gift purposes are also irrevocable and they generally require that you, as the grantor, release a level of control over the assets. So, when we advise clients about trusts, we encourage them to sit with the documents a bit more and to think through possibilities and eventualities as these trusts are far more difficult to adjust or modify than your foundational estate planning documents.

Finally, if you wait until the end of the year to make gifts, you may run the risk of not “completing” the gift for gift-tax purposes and you may lose the use of your annual exclusion. For example, a check sent on December 30th is not a completed gift unless it is cashed before December 31st.

6. Set Up Appointments with Your Financial Advisor and/or Tax Preparer for End-of-Year Planning

If you already participate in quarterly meetings with your financial advisor, you are likely familiar with conversations about end-of-year tax planning and “harvesting” capital gains or losses. However, if you do not have such meetings, you should meet with your financial advisor and/or tax advisor well before the end of the year to make sure that you are in a position to take full advantage of this year’s exemptions and exclusions and to make sure that you are prepared for next year’s tax filings.

Additionally, if you have engaged in more advanced estate planning strategies in the past (such as creating Annuity Trusts, Qualified Personal Residence Trusts, Private Foundations, etc.), it is important to review these entities periodically with your advisors and estate planning attorneys to ensure that you are meeting all your annual requirements and to review any of your retained powers to avoid issues which could negatively affect the estate planning benefits for which these entities were created.

Scheduling these appointments early gives you time to make sure that you are on track to maximize retirement contributions, charitable donations, and/or annual gift tax exclusions.

In summary, although year-end seems far away, it will be here before you know it! To learn more or to schedule a consultation with our team of estates and trusts attorneys, get in touch with our offices today.


Related blog posts:

7 Important Estates & Trusts Law Updates for Maryland in 2023

Estate Planning Opportunities Under SECURE 2.0

4 IRA Rules You Should Know From the SECURE ACT of 2020

7 Strategies for the Holiday Gifting Season and Beyond

End-of-the-Year Considerations and Annual Maintenance Reminders

How to Have a Conversation With Your Family About Your Wishes for After You Pass

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