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Three key estate planning actions for today

Three key estate planning actions for today

November 20, 2023

Estate planning is a unique undertaking for every individual because plans are typically based on a distinct combination of legal, financial, and personal factors. Planning basics, such as making decisions about creating a will, trust, powers of attorney, and designating beneficiaries, will always remain necessary. But we are living in a time where there are newer variables to consider in planning. Here are a few to keep in mind as you review, renew and update your estate plan this year.

Estate tax exemptions to change
Laws that were enacted in 2017 made substantial changes to the estate tax exemption, nearly doubling the lifetime estate and gift tax exemption. In 2023, it stands at $12.92 million or $25.84 million per married couple. Thus many individuals and families could expect no federal estate taxation.

However, this law also included a sunset provision that would revert the exemption to previous lower levels after 2025. Unless new legislation is passed, the estate tax exemption could potentially impact your situation. This means it is important for families to review their estate plans and work with a financial planner and attorney now to have a plan in case the exemption does, in fact, revert.

Diverse family structures are becoming the norm
Families today come in all shapes and sizes. For example, it is estimated that at least 40% of families within the U.S. are a blended household, including a step-parent, step-sibling, or half-sibling. In addition, the number of single-parent families is on the rise. It is important to clearly define how assets should be distributed in various family dynamic situations to meet your intent at your passing–and reduce conflicts.

Solid estate planning can consider these factors, along with your charitable giving plans. But the plan must be in place, along with coordinated asset titling and beneficiary designations for it all to be effective.

Digital and cryptocurrency assets take on more meaning
You may have heard the story of someone not being able to access their cryptocurrency and losing thousands or even millions in the process. In fact, we’ve encountered families who have experienced such a loss. Fortunately, this tragic situation is preventable with a bit of planning.

With the increasing prevalence of digital assets like cryptocurrencies, it's crucial to include these assets in your estate plan. First, make a comprehensive inventory of your digital assets, including cryptocurrency holdings, and specify how they should be managed or transferred upon your death. Next, ensure your heirs have access to important information such as private keys and passwords. Finally, as an added safety measure, you may consider consulting with a legal professional to ensure the safe and legal transfer of these digital assets at your passing.

Comprehensive estate planning, at times, ends up in the procrastination category. Fast approaching 2026 may be just the catalyst needed to implement or update one’s distribution intent. For more information on estate planning, including a free document locator and inventory checklist, please contact our Kensington Wealth Partners team.

Paula Tarpey is a strong leader in the financial community. She currently serves as director of wealth management and partner at Kensington Wealth Partners. Paula is a published author and is often requested to speak to national and local audiences on financial planning topics. Most importantly, Paula is passionate about serving her clients and community and is proactive in helping her clients take action to achieve their goals.

Paula Tarpey is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Kensington Wealth Partners is not an affiliate of Lincoln Financial Advisors Corp.

Lincoln Financial Advisors Corp. and its representatives do not provide legal or tax advice. You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.