Key Estate Planning Advice for the Terminally Ill

Nearly everyone expects to live to their full life expectancy. However, as we grow older, we begin to see many friends and loved ones die early due to cancer, heart disease or various tragic, unexpected events. For this reason, every adult should create an estate plan and remain ready to modify it once a terminal illness or tragedy suddenly unfolds.

After all, our family members, friends and favorite charities depend on us to maximize the gifts we make through our Wills, trusts and other testamentary devices.

To get ready for this process, you should first make a list of all your current assets (and their values) and then schedule an appointment with your Houston estate planning attorney. When you meet, your lawyer can explain the choices you’ll need to make that can simplify the process, while also decreasing the tax burdens on your heirs and other beneficiaries.

Here’s a look at some of the ways that terminally ill people – or those aware that the end of life is fast approaching – can adjust their estate plans to maximize the final gifts they can give to all those they wish to help.

Specific steps for the terminally ill to consider while updating or creating an estate plan

  • Decide if you should set up a revocable trust. This can help greatly reduce all the tasks the appointed executor must handle — and can lessen the chances that any of your estate will have to pass through the probate process.
  • If you’re a parent or grandparent, consider creating a private annuity. This will allow you to transfer substantial assets to your loved ones while retaining a lifetime annuity. If you do not live to your expected lifetime expectancy, as set forth in actuarial tables maintained by the IRS, most (or all) of your assets may not be taxed.
  • Make sure you’ve fully used up all your current annual exclusions. As many taxpayers know, every American has the right to give $12,000 a year to multiple donees. And if your spouse agrees to all the gifts you’d like to make during the current tax year, you could give away a total of $288,000 — tax free. It’s also possible that other “leveraging” techniques involving family partnerships could greatly increase that amount.
  • Check to see if all your assets are titled properly (so your beneficiaries will reap the best tax benefits). Your lawyer can explain how this can help you obtain the full lifetime exemption from estate taxes. In some cases, it may be best if many assets (including the highly appreciated ones) are held in the name of the terminally ill spouse. When this is allowed, it can help minimize all the capital gain taxes that might otherwise accrue when various assets are sold after the terminally ill person passes away.
  • Review all the assets held in your 401k and other retirement accounts. This can also help you recall what you’ve already bequeathed to various beneficiaries. Be sure to bring all the updated information about these accounts to the meeting.
  • Create an update list of all named beneficiaries and their current addresses. Everyone will appreciate being able to receive your gifts as quickly as possible.
  • Consider placing a certain amount of cash in your checking or savings account so that your executor can easily pay your final expenses using that money.

If you’re the terminally ill patient, seriously consider asking your spouse, executor, other trusted family member or close friend to take part in this meeting with your attorney. This can help you avoid forgetting important assets and beneficiaries. It can also remind you to tell this trusted person where you currently keep all your real estate deeds, the passbooks for all your investment and saving accounts — and all your online account usernames and passwords.

While the information above isn’t intended to be fully comprehensive, it should provide you with an accurate idea of the types of matters you and your lawyer can handle during your upcoming appointment.

Finally, please be aware that your attorney may be able to arrange an initial, teleconferencing appointment if that will work best due to your serious illness. Finalized paperwork can then be signed within a short timeframe.

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Please feel free to contact your Murray Lobb attorneys for help with any of your estate planning or general business needs. We try to remain available to provide you with prompt legal advice and the various contracts and other documents that help keep your business running.