Tax Time Audit for Estate Planning Documents

March 30, 2009

At tax time, many people consider their financial status. Many of us are looking at broker statements for the first time because we have been unwilling to face the bad news. Regardless of how difficult the year has been financially, however, this is an appropriate time to consider looking at your estate planning documents to see whether those documents are up-to-date. For example, are the persons that you have appointed as your executors or trustees still the best choices for those jobs?

The fact that your estate may be less than it was last year at this time does not make the proper choice of persons any less important. Indeed, shrinkage in estates makes it all the more important to select the right people for these important positions of trust and responsibility, so called fiduciary positions, who will be careful and able to adapt to changing market conditions.

Do you have a current power of attorney? Stockbrokers, banks and transfer agents are becoming more insistent that these documents be current. Are the persons you have appointed as your agents or powers of attorney still the ones who are best suited for those positions to manage your assets if you became incapacitated? 

Are the persons that you have appointed as agents on your living wills or health care powers of attorneys able to cope with what can be difficult medical decisions, especially in light of insurance carriers that can be unwilling to pay for unnecessary tests and procedures. Are these the people who would act as your advocates in the face of an insurance carrier that would want to save money at the expense of your health care.

If you have a family business, you may want to provide for the succession of management because any disruption in a smooth transition of the operation of the business could be disastrous in an era of tight margins and challenging business conditions.

Perhaps most important, if somewhat elementary, can you locate your documents in the event of an emergency? The best drafted documents are of little use if they cannot be located.  Our office provides clients an Estate Planning Document Checklist which can be invaluable to an agent or executor who may need to locate documents and contact brokers, bankers, insurance agents, etc.