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Think for a few moments about what would happen if you suddenly became incapacitated or died. Would your spouse or family know what to do? Would they know where to find important records, assets and insurance documents? Would they be able to access (or even know about) online accounts or files on your computer? Would they know whom to ask if they need help? Putting the effort in now to establish a formal document inventory can alleviate unnecessary anxiety and turmoil in the future.
 
The Key Takeaways

• If you should suddenly become incapacitated or die, your family would need to know where to find the information they would need.
• Let your key relationships know where to find your document inventory.
• Do not assume your process will be readily understood by others; have a trial run to make sure they can find and understand your records.
• Keep your inventory current with an annual review.

What Information Would They Need?
There is a large volume of documents and information that your family would need during a calamitous event such as incapacitation (even temporary) or death. This basic list will help you start thinking of the critical information you would want your family to have.

• legal documents (will, living trust, health care documents);
• list of medications you are taking;
• list of your advisors (attorney, CPA, banker, insurance agent, financial advisor, physicians);
• insurance policies (health and life);
• year-end bank and investment account statements;
• storage facility location, access method, and inventory;
• list of other assets, including location, account numbers, date purchased and purchase price;
• safe deposit box location, list of contents and location of key;
• list of people to whom you owe money (mortgage, credit cards, etc.);
• list of people who owe you money;
• death or disability benefits from organizations;
• past tax returns.

Also, many of your records are probably on a computer or stored online. If you scan documents or receive financial statements electronically, someone else may not even know they exist. If you use a computer accounting program such as Quicken, QuickBooks or Mint, those records would be on your computer. Family photos may be stored digitally or online. Much of this information is password protected.
 
What You Need to Know: Your document inventory requires a methodical listing of both hard copy and digital forms. While the effort will be more challenging at the start, the maintenance of the inventory is much simpler. Be mindful that your digital footprint will likely grow much faster in the future than it has in the past.
 
Actions to Consider

• Give current copies of your health care documents to your physicians and designated agent(s).
• Keep your original documents in one safe place, like a fireproof safe or safe deposit box. Make copies for the notebook described next.
• Buy one or two three-ring binders to organize your personal and financial information. You can enter it by hand or create spreadsheets on your computer, but having it all in one or two binders will make it easy for your family to find and use. (If you leave it on your computer, they may never find it.) Include locations, contact information, account numbers and amounts.
• Include a list of online accounts and how to access them (including passwords).
• Clean up your computer desktop and put important files in an easy-to-find desktop folder.
• Have a trial run. Ask your spouse or other family member (or your successor trustee or executor) to pretend that he or she needs to access needed information.
• At least once a year, review and update your notebook, computer desktop files and passwords for online accounts.

Estate planning attorneys are often asked where original estate planning documents – wills, trusts, powers of attorney, and healthcare directives – should be stored for safekeeping. While there is no right or wrong answer to this question, consider the following:

• Should you store your original estate planning documents in your safe deposit box? Many people may believe that the best place to store their original estate planning documents is in their safe deposit box at the local bank. This may make sense if you have given your spouse or a trusted child, other family member, or friend access to your box. However, since a safe deposit box is a rental arrangement (you are leasing the box from the bank), if you are the only one who signed the lease and you become incapacitated or die, no one else will be able to open your box. Usually the only way for someone else to gain access to your box if you become incapacitated or die is to obtain a court order, which wastes time and money. If you are not comfortable giving someone else immediate access to your box, many banks will allow you to add your revocable living trust as an additional lessee, which will give your successor trustee access to your box if for any reason you can no longer serve as trustee of your trust.
• Should you store your original estate planning documents in your home safe? Home safes are popular these days, but in order for yours to be a good place to store your original estate planning documents, it should be fire-proof, and water-proof. In addition, make sure someone you trust has the combination to your safe or will easily gain access to the combination if you become incapacitated or die.
• Should you ask your estate planning attorney to store your original estate planning documents? Traditionally, many estate planning attorneys offered to hold their clients’ original estate planning documents for safekeeping. Today most don’t want to take on the liability. In addition, as the years go by, it may become difficult for family members to track down your attorney, who could change firms or pass away.
• Should you ask your corporate trustee to store your original estate planning documents? If you have named a bank or trust company as your executor or successor trustee, this may be the best place to store your original estate planning documents. This is because banks and trust companies have specific procedures in place to insure that your original estate planning documents are stored in a safe and secure area. If you choose this option, make sure one or more of your family members know where your original documents are located.

Regardless of where you decide to store your original estate planning documents, make sure your family members, a trusted friend or advisor, or your estate planning attorney know where to find them.

One of the first things you should do as a newly appointed executor of a deceased person’s probate estate or successor trustee of a deceased trustmaker’s trust is ask the post office to forward the deceased person’s mail to your address. Unfortunately, along with important pieces of mail – statements, bills, and refunds – many not-so-important pieces – catalogs, solicitations, and plain old junk mail – will end up in your mailbox.
 
On the other hand, you may have purchased a home from a deceased person’s estate or trust and have received some of their mail at your new address.
 
What can you do to stop the post office from delivering mail addressed to a deceased person? Follow these four steps:

1. If you are the executor of an estate that has been through probate court and the estate is officially closed, hand-deliver or send a copy of the probate order closing the estate and dismissing you as the executor to the deceased person’s local post office, and request that all mail service be stopped immediately. If you don’t take this step and find that some mail continues to trickle through two or more years after the death, this is because the U.S. post office only honors forwarding orders for one year. The only way to completely stop delivery is to request that all mail service be discontinued.
2. To stop mail received as the result of commercial marketing lists (in other words, junk mail), log on to the Deceased Do Not Contact Registration page (https://www.ims-dm.com/cgi/ddnc.php) of the DMAchoice.org website and enter the deceased person’s information. According to the website, “DMAchoice™ is an online tool developed by the Direct Marketing Association to help you manage your mail. This site is part of a larger program designed to respond to consumers’ concerns over the amount of mail they receive, and it is the evolution of the DMA’s Mail Preference Service created in 1971.” After registering the deceased person on the website, the organization claims that the amount of mail received as the result of commercial marketing lists should decrease within three months.
3. For magazines and other subscriptions and mail that is technically not “junk” mail (for example, solicitations from charities to which the deceased person made donations while they were living), contact the organization directly to inform them of the death. Note that most publishers will issue a refund for any unused subscription.
4. If you shared the mailing address with the deceased person or if you are the new owner of the deceased person’s home, write “Deceased, Return to Sender” on any mail addressed to the deceased person and leave it in your mailbox for pick up.

Remember it is a federal offense to open and read someone else’s mail, so if you’re not a legal representative of the deceased person, don’t open their mail!

Three Traps to Avoid

1. Taking Money Too Early. It can be tempting to start taking your benefits as soon as you become eligible at age 62. But the longer you can wait, the higher your monthly benefit will be—and the more you will receive over your lifetime. Also, cost of living adjustments (COLA) are calculated on the amount of your monthly benefit, so if you take benefits at age 62, your COLA adjustments will be calculated on a lower amount.
2. Working Income. If you elect to take benefits early and you keep working, the amount of your benefit can be reduced. This reduction will continue until the year you reach full retirement age (66). In 2014, Social Security reduces benefits by $1 for every $2 of earned income above $15,480. For example, say you start benefits at 62 and you have earned income of $30,000. You are $14,520 over the annual limit, so you will receive $7,260 less in benefits (50% of the difference). However, the benefit reductions are not lost; they are deferred and credited to your benefits record when you reach full retirement age.
3. Spousal Benefits. Your decision when to start taking your benefit affects your spouse too. After you die, your spouse is eligible to receive your monthly benefit if his/her own benefit is less than yours. If you elect to receive your benefit earlier rather than later, your spouse’s benefit will also be lower. If you wait until you reach full retirement age (66), you can claim your Social Security benefits but delay taking them. This lets your spouse draw spousal benefits immediately, while you continue working and increasing the value of your future benefits.

Actions to Consider

• If you are concerned about the future of Social Security, you could take your benefits at 62 and invest them. By the time you need to start taking the money, you may be able to make up any loss you incur by taking them early. But, of course, this is dependent on your portfolio allocation and market performance.
• If you keep working beyond age 62, your Social Security benefit will increase each year up to age 70.
• While you are eligible for Social Security at age 62, you are not eligible for Medicare until age 65. If you stop working, you will have to pay for private insurance with your own money.
• If you wait until your full retirement age (66), another spousal benefit option is available. If you both want to retire at the same time and your spouse will receive a lower benefit, you can claim spousal benefits now from your spouse, let your benefits continue to grow and then switch to your (higher) benefit later.

One common way to avoid probate of real estate after the owner dies is to hold the title to the property in joint names with rights of survivorship with children or other beneficiaries. This is accomplished by adding the names of the children and certain legal terms to a new deed for the property and then recording it in the applicable public land records.
 
Many people believe that they do not need to consult an attorney to help them prepare and record the new deed. Instead, they think that a deed form can simply be downloaded from the internet or obtained from a book that can then be easily filled out and recorded. But deeds are in fact legal documents that must comply with state law in order to be valid. In addition, in most states, property will not pass to the other owners listed in a deed without probate unless certain specific legal terms are used in the deed.
 
How is a Defective Deed or an Invalid Deed Corrected?
 
If the problems with a defective deed or an invalid deed are discovered before the owner dies, then the problems can be addressed by preparing and recording a “corrective deed” in the applicable public land records. This should only be done with the assistance of an attorney.
 
Unfortunately, many times the problems with a defective deed or an invalid deed are not discovered until after the owner dies. If this is the case, then the problems cannot be fixed with a corrective deed since the deceased owner is unable to sign the corrective deed. Instead, the property will most likely need to be probated in order to fix the problems with the title. Aside from probate taking time and costing money for legal fees and court expenses, until the problems with the title are sorted out in probate court, heirs will not be able to sell the property. Or, worse yet, the property may be inherited by someone the owner had intended to disinherit when they prepared and recorded their own deed.
 
If you want your home or other real estate to pass to your children or other beneficiaries without probate, then seek the advice of an attorney who is familiar with the probate and real estate laws of the state where your property is located. This will insure that the deed will be valid and your property will in fact avoid probate and pass to your intended heirs.
 

Identical bills have been introduced in the U.S. House and Senate that would permanently repeal the federal estate tax and generation-skipping transfer (“GST”) tax.
 
Overview of Current Federal Estate, Gift, and GST Tax Laws
 
Under current law, the exemptions from federal estate taxes, lifetime gift taxes, and GST taxes are indexed for inflation on annual basis. In 2015, the exemption from each tax is $5,430,000. In addition, the top tax rate for each type of tax has been holding steady at 40 percent since 2013 and will remain at this rate in future years (barring any legislative changes).
 
Summary of Death Tax Repeal Act of 2015
 
On February 26, 2015, Rep. Kevin Brady (R – TX) introduced a bill “To amend the Internal Revenue Code of 1986 to repeal the estate and generation-skipping transfer taxes, and for other purposes,” to be known as the “Death Tax Repeal Act of 2015” (H.R. 1105).
 
This bill currently has 135 Co-Sponsors (134 Republicans and one Democrat – Rep. Sanford D. Bishop, Jr. (GA)) and provides for the following:
 
• Repeals the federal estate tax and the GST tax for estates of decedents dying, and generation-skipping transfers made, after the date of enactment;
• Includes special rules for assets held in a qualified domestic trust before the date of enactment;
• Retains the federal gift tax with a top rate of 35 percent;
• Retains the current law regarding the lifetime gift tax exemption;
• Retains the gift tax annual exclusion ($10,000 as adjusted for inflation at a minimum of $1,000 increments; the exclusion is $14,000 for 2015);
• Provides that transfers in trust will be treated as taxable gifts, unless the trust is treated as a grantor trust; and
• Retains the carryover basis rules for lifetime gifts and stepped-up basis for property transferred after death.
 
On March 25, 2015, Sen. John Thune (R – SD) introduced an identical bill in the Senate (S.860) (the Senate bill was introduced with 26 Co-Sponsors, all Republicans). On that same date, the House Ways and Means Committee (the chief tax-writing committee of the House) voted to favorably report the bill (as amended) by a roll call vote along party lines of 22 yeas to 10 nays.
 
What is the Future of the Death Tax Repeal Act of 2015?
 
President Obama has already expressed his disapproval of the proposal and would likely veto the bill if it ever came across his desk for signature. Nonetheless, our firm will continue to monitor both state and federal bills that will affect your estate plan and your estate tax bill. You should be aware of these proposed changes because legislative changes can have a significant impact on your estate plan.