Case Studies and Articles

Is Your House in Order? – Henry & Associates

Is Your House in Order? – Henry & Associates

Is Your House in Order?

The latest version of tax relief and simplification (186 pages of new Code in EGTRRA 2001) does offer some fleeting relief for a few smaller estates, but it also increases the risk that a surviving spouse may be accidentally disinherited.  For those using a “formula clause” to fully fund a credit shelter trust or a generation skipping trust, beware that rising exemptions may cause problems.  The use of tax saving clauses in a will or trust is designed to pass assets to family without unnecessary tax, but extra caution is now warranted.  If your plan hasn’t been reviewed this year and you have assets that approach the level for a federal estate tax liability, get yourself to a tax lawyer’s office and see what needs to be done.

Unexpected consequences of tax law changes, and this tax law change was significant, often create ripple effects that weren’t planned.  As Congress starts taking away the states’ ability to piggyback on the federal tax, what many tax commentators expect to see is a return to the bad old days where every state taxing body had their own version of an estate or inheritance tax pop back into place to replace lost revenues.  This tax relief package is likely to create several new problems, and because the target is continually moving, the planning is more difficult, not less.

This is no time for hide ‘n seek.

While tax planning is often considered one of the principal reasons for planning, there are other important considerations for those left behind.  A good estate plan addresses their needs for organization, closure and security.  If you’ve ever misplaced car keys or a wallet, you can think back to what it was that you were doing when you last had them in your hands.  Imagine instead your heirs frantically poring over files, pawing through desk drawers and searching the wastebasket for receipts in order to find answers after someone has passed away.  Important documents need to be organized and easily found, and that doesn’t necessarily mean using a lockbox at the bank.  In fact, your Will and burial instructions are better stored some place easily reached by family or legal advisors, as safety-deposit boxes are often inaccessible after a death.

With all of the turmoil associated with the September 11th tragedy, it has made many people realize that there’s little certainty in life.  In an effort to help family survivors avoid the confusion and distress associated with the passing of family members, now is a good time to review your planning options and documents.

Here’s a document checklist that may be helpful as you get your affairs in order:

  (1)    Birth certificates


(2)    Life insurance policies  (have you checked to see if beneficiary designations current and accurate?)

(3)    Identify other insurance policies (disability, affinity programs, health, property & casualty, annuity contracts)

(4)    Stock and bond holdings, consolidated investment account statements

(5)    Powers of attorney for health care and property, and any living will documents.  While not helpful after death, they are extremely important if there is a disability or incompetence.

(6)    Mortgage documents

(7)    Deeds, including cemetery plots

(8)    Bank account information, checkbooks, passbook savings, account statements

(9)    Leases

(10)    Your will and codicils (have you identified guardians for minors and elderly parents?)

(11)    Trust documents and amendments (have you properly titled property in the name of the trust?)

(12)    Partnership agreements and recent appraisals

(13)    Pension, profit-sharing, IRA and other retirement plans  (have you checked if beneficiary designations are current, now that new rules apply to changing distributions and modifying beneficiaries, they need to be reviewed)

(14)    Marriage certificate and any court documents dealing with a name change or adoption proceedings


(15)    Marriage contracts (pre-nuptial and post-nuptial)

(16)    Divorce or separation agreements

(17)    Employment contracts, deferred compensation or “golden parachutes/handcuffs” type agreements

(18)    Corporate or partnership buy-sell agreements, business continuity planning documents

(19)    Any life income arrangements (commercial immediate annuities, charitable trusts, life estates)

(19)    Social Security card

(20)    Veteran’s benefits updated and military discharge paperwork, e.g., DD-214

(21)    Funeral arrangements and burial instructions

(22)    Directions for pet care

(23)    Recent income and gift tax returns

(24)    Inventory of capital assets (real estate, stock, investments, collectibles, etc.) with purchase price, history of acquisition, improvements and tax basis (which will be extremely important if the tax law continues unchanged)

(25)   Organ donation instructions

Vaughn W. Henry

© 2001

Springfield, Illinois