5 Things Your Estate Plan May Be Missing

5 Things Your Estate Plan May Be Missing

For many people, 2020 will be used as a catalyst for change. No one could have predicted what the year had in store, and a lot of people weren’t prepared.

As we approach a new year, creating or updating a financial and estate plan has become a top priority. As a financial advisor in Sonoma County and founder of Montgomery Taylor Wealth Management, I am pleased to see this.

Keep in mind that a comprehensive estate plan should include a plan for disposition of your assets upon your death as well as a plan for your financial affairs and medical care should you become too ill or incapacitated to manage them or communicate yourself. Even if you already have a will and power of attorney in place, you may be missing a few important elements.

In our experience, we see 5 things commonly left out of estate plans that are very important. If you’re making the effort to update your plans, make sure yours includes the following.


With a new year right around the corner, contact Montgomery Taylor Wealth Management to see how we can help you get on track for 2021.


1. Updated Beneficiaries

If you have an estate plan, you have in all likelihood named beneficiaries. But don’t forget that beneficiaries need to be updated periodically. (Reviewing them once a year is a very good idea.)

Life brings changes with it. If you’ve divorced, remarried, had children or lost a loved one, you may be leaving your assets to ex-spouses or to someone who is no longer living. If your family size has increased, don’t forget to adapt your plan so everyone is included.

Retirement funds, such as Individual Retirement Accounts (IRAs) and 401(k)s, ask you to name a beneficiary when you set them up. While these forms are not officially part of your estate plan, updating them at least once a year is also a good idea, so your beneficiary is current. It’s important that your financial, retirement and estate plans are intertwined.

2. A Master Directory

A master directory (sometimes called an asset list) is a key, yet often overlooked, part of any estate plan. This list should include all your financial accounts and relationships, including account numbers, the names of key personal contacts (such as your financial advisor) and contact information, including web addresses, e-mail addresses and phone numbers, if relevant.

Think of it from the perspective of your loved ones. If you were to pass away suddenly or unexpectedly, would they know what assets exist and how to access them?

End-of-year is a great time to review your financial accounts and assets and update this directory. Make sure to include any:

  • Bank accounts, including checking and savings
  • Automatic deposit arrangements
  • Brokerage accounts
  • Retirement accounts, such as IRAs and 401(k)s
  • Annuity documents
  • Pension documents
  • Other financial assets, such as collectibles (art, coins, etc.) or precious metals
  • Life insurance policies
  • Safe-deposit boxes
  • Mortgage documents
  • Deeds to homes, land or cemetery plots
  • Vehicle titles
  • Tax returns from the last three years
  • Marriage licenses and divorce decrees, if applicable
  • Loan information, including the amount, the party responsible for paying them and the terms

It’s also wise to include any outstanding debts, such as your mortgage, credit cards, student loans or personal loans.

In today’s world, many of these accounts will be online. Be sure to include your username and password for all online accounts, if applicable.

Because so many accounts and other financial information is online, it’s a good idea to include a digital asset directory as part of the master directory. Your e-mail addresses, accounts and even social media accounts should be accessible to your heirs upon your death, because they can all aid in the orderly disbursement of your estate.

Obviously, this list is extremely sensitive. Keep it in a very secure place. At least one trusted person should know of its existence and its location.

3. A Plan for Taxes

Taxes can take a big bite out of your estate. It’s prudent to discuss tax-planning strategies with your financial advisor to make sure you’re getting the most out of your investments.

There are strategies when it comes to planning your estate that can help both you and your heirs. For example, some of our clients choose to reduce the size of their estate by giving a cash gift of up to $15,000 per year. There are ways this can be done without triggering any taxes. A single person can leave $11.58 million to heirs as of 2020 and pay no federal estate tax. The figure is doubled for a couple.

Other clients have opted to reduce their estate by paying their loved ones’ educational bills or healthcare bills, another strategy that avoids penalties, as long as you don’t pay the individuals directly. You can, for example, write a check to your grandchildren’s college for their tuition as a method of reducing the size of your estate.

Discussing your plans with a financial advisor gives you a better chance of making your dreams a reality. If you’re currently looking for a financial advisor in Sonoma County to work with or feel it’s time for a change, contact Montgomery Taylor Wealth Management. We’re here to help, whether you’re a current client or not.

4. A Plan for Your Business 

If you own and run a business, you may have multiple considerations to think through as part of your estate plan. For example, do you have an exit plan? Have you discussed your wishes for the business after your death with your successors and beneficiaries? Have you put these wishes in writing?

If your family does not plan to follow you into the business, is there a succession plan in place for who will? Who will determine your successor, and through what process?

It’s also important to put a plan into place should you become ill or incapacitated at some point and unable to fulfill your former functions.

If part or all of the business will be bequeathed to one or more family members, review your will to make sure the assets left to other family members are fair and commensurate in your view.

With a new year approaching, it’s also a good idea to discuss any tax-planning strategies that can help your business, both now and in your estate.

5. Strategies that Can Help You While Still Living

A common misconception is that an estate plan only helps when you’re gone. While wills are common, they are not the only way to let your beneficiaries receive your assets. Another method is to create a living trust rather than a will, which allows you to benefit from your assets during your lifetime.

Like a will, a living trust names your desired beneficiaries and matches them with the assets you wish them to receive upon your death. However, as the term implies, a living trust creates a separate entity that holds possession of your assets and allows you access to them via the trustee until your death.

Living trusts are also not subject to probate. The probate process of certifying a will and assessing whether the estate has any debts can be very lengthy, lasting months or even years. This can add stress and confusion for your loved ones when you pass away.

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