Estate Planning

[lawman]

I am 62 years old with only one adult child..I am giving thought to estate planning..I have I-Bonds, stock mutual funds, bond mutual funds, I.R.A's , Roth IRA, 403B, cash and real property..There is nothing that I need to sell and may not sell anything before I die..Is there anything that I should sell for tax purposes before I die? If I should need to sell something before I die what should I sell first?

 

[GrayHare]

If you are leaving investments to a beneficary other than a charity, you can sell those on which you have capital loss. Use those losses to offset gains. Thay way the basis will not be stepped down when you pass on.

 

[lawman]

makes sense..thx

 

[Another Reader]

Yes. In most cases it's beneficial to set up a revocable living trust so that your assets pass outside probate. IRA's should pass outside the trust and you should verify that the beneficiary information is current. A competent estate planning attorney can help you set this up so problems are minimized for the heir.

 

[RunningBum]

And the converse is, your child gets a stepped up basis on other assets, so you're better off not selling stuff.

If the child's income tax bracket is higher than yours, you're better off converting those tax deferred accounts to a Roth.

Some say that real property can be a pain to inherit, for example if it's a rental property and they don't want to be a property manager, so that is one thing you might consider selling, but if you've been depreciating it, it would probably have the highest capital gain.

If you can set up a Transfer on Death on any accounts, even real estate, that will get them the money without going through probate.

 

[Another Reader]

I think TOD varies by state. The OP should be meeting with a good estate attorney to discuss all the options in the OP's state.

 

[lawman]

My only child is listed as beneficiary on everything after my wife so I really don't understand what would be gained by hiring an attorney..I live in Texas and would be willing to do so if necessary but I just don't know if the benefit would be worth the cost..

 

[pjigar]

My only child is listed as beneficiary on everything after my wife so I really don't understand what would be gained by hiring an attorney..I live in Texas and would be willing to do so if necessary but I just don't know if the benefit would be worth the cost..

You still want to have a formal estate plan complete with will and trust. Lot of your assets can't have beneficiary designated unless you have a will e.g. cars, personal properties, gold, etc. It is simpler to assign everything to trust in the last will to avoid any probate.

 

[googily]

As a recent widow, I would mention that getting an estate attorney now to get everything in order does two things:

1. If you go first, it gives your wife someone to hold her hand through the process of handling your estate;

2. It gives you the opportunity to really think about how you want everything set up if you go first, or if your wife goes first, or if you both go at the same time. And also it gives you the chance to give some guidance to your wife on how things should be set up after you are gone and to prepare for her eventual passing.

I would agree on the surface that if a married couple can handle most things through TOD/beneficiaries, the first spouse's death will be relatively "easy" estate wise. But then the remaining spouse is left alone to figure everything out. Maybe that's not a problem with your wife, but it's worth thinking about. If she doesn't like dealing with the money stuff, she may thank you for finding someone who will help her during a very difficult time.

 

[Souschef]

We went to an estate attorney, and had POA's for health and finances and a pour over will drafted. It is in a binder marked "Estate Plan".
Also, in the binder are sheets listing all our assets, where they are, who gets which, all the account numbers, names addresses and phone numbers of all the investment firms, all my passwords for each account.
There is also an icon on my desktop marked xxx's stuff, where a duplicate set of the information is stored.

 

[Dancfo]

Don't forget - Texas is a community property state. This adds another layer of thought into the process. Not overly complicated, but something that needs to be considered.

 

[lawman]

Thanks guys..I will contact an estate planner..

 

[Souschef]

Don't forget - Texas is a community property state. This adds another layer of thought into the process. Not overly complicated, but something that needs to be considered.

Agreed, especially in California. In the case of second marriages, there may be a lot of separate property that has to be passed to the beneficiaries.