2018 Midterm Elections: What Do They Mean For Your Estate Plan?

Strategic Planning Guidance in Light of the Midterm Results
Estate planning is meant to be an ongoing process, not a one-time transaction. In the same way that you never stop budgeting, saving, and investing as you go through life, it is also sensible to see estate planning as a lifelong project. Let’s look at some of the considerations you should make now that the 2018 midterm elections are in the history books.
Planning in a Fluctuating Political Climate 

Estate plans must change when *you experience any major life changes, such as marrying someone new or welcoming a child to the family.
But you also need to respond effectively to large-scale changes that are external to your personal life, such as legislation that impacts the way your assets are taxed. Regardless of your political leanings, it’s safe to say the United States is continuing to experience a period of dramatic political and legal change.
Elections like the 2018 midterms — and the resulting political change — often create fear and anxiety about how the impact of new laws and tax policy will affect your life. But you can offset that uncertainty by focusing on making the smartest estate planning decisions possible in light of the results. We’re watching the situation as it moves forward and will keep you informed of legal and tax changes that affect you and your loved ones.
The Midterm Split: Democrats Won the House, Republicans Kept the Senate
Before the midterm elections, it was unclear how legislation like the 2017 Tax Cuts and Jobs Act would be affected. Now that we know the House and Senate are split between Democratic and Republican control, it remains to be seen how well the parties will work together on a common agenda.
So what does a divided federal government mean for you? The budget reconciliation strategy the Republicans used to pass the Tax Act will no longer be as viable an option, which could slow additional legislation the Republican-controlled Senate proposes. According to Kiplinger, "What is likely off the table with a Democratic House and Republican Senate is tax reform 2.0, which would make certain provisions of the 2017 tax law permanent, locking in individual and small business tax cuts. Social Security and Medicare reforms, which might have helped offset the effect of the tax cuts, are also likely off the table."
When the new Congress first convenes in January, we will continue to monitor proposed legislation so you are informed about potential risks and opportunities for your estate plan.
Some Things Are Constant, No Matter Who’s in Charge
Amid so much political uncertainty, it’s important to remember there are many foundational constants in estate planning that are important no matter who’s in charge politically or what the tax laws look like. As part of your financial wellness team, we’re staying informed and will be here to guide you in matters of estate planning.
In order for you to grow and retain your wealth, careful estate planning is always a necessity — regardless of which party controls Congress. Many things may change, but a lot will remain the same: no one can legislate away irresponsible spending, divorce, lawsuits, bankruptcy, sibling rivalry, and the many non-tax reasons to utilize estate planning. An up-to-date comprehensive estate plan remains the best option for passing along your wealth and your values to the next generation.
Will your estate plan do what want it to do? Is it customized to help you thrive in the current U.S. legislative landscape? Let’s take a look. Give us a call today.
Brought to you by:
Stephen P. Stewart
7320 Six Forks Road
Suite 100
Raleigh, North Carolina 27615
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The Pros and Cons of Payable on Death Accounts

One of the most common goals of estate planning is avoiding probate.  Probate is the court supervised process whereby your executor or administrator marshals your assets, pays your debts and then distributes your property when you die.  Probate is a public process that often involves considerable time and expense.  Therefore, avoiding probate allows heirs to receive their inheritance faster, privately, and at lower cost.
Payable on Death Accounts
Payable on death (“POD”) accounts are a simple, easy to use method to avoid probate.  A POD account is set up signing a POD designation when you open the account naming one or more beneficiaries to receive the assets in the account at your death.  A POD designation can be set up for savings, checking, certificates of deposit, U.S. savings bonds, and investment accounts and you can change your beneficiaries whenever you wish.
After the death of the POD account holder, there is typically a simple claim procedure involving the completion of a claim form, presentation of a death certificate, and proof of identification by the beneficiary, completely avoiding probate.  POD accounts are different than joint accounts in that the named beneficiaries have no access to the accounts during the lifetime of the account holder.
 Pros

1. POD accounts are easy to establish;
2. POD accounts are not subject to probate;
3. The claim procedure for the beneficiary is usually quick and simple; and
4. POD accounts are inexpensive because there are no professional fees involved in setting them up or administering them at death.

While POD accounts may achieve the goal of probate avoidance, they are imperfect and incomplete solutions at best when compared to other available estate planning techniques.
Cons

1. POD accounts may not actually avoid probate. If a designated beneficiary predeceases you and you fail to name a new beneficiary before you die, the account will go through probate.
2. POD accounts do not offer any creditor protection. If the beneficiary is in the middle of a bankruptcy, divorce, or a lawsuit or has existing judgments or liens against him or her, those creditors will be able to reach the proceeds of the POD account in the hands of the beneficiary.
3. POD accounts are only effective at death and do not provide for access to and management of your assets in the event of incapacity.

A Better Solution
There is a better, comprehensive solution:  a revocable living trust (“RLT”).  Similarly to a POD account, transferring your accounts to an RLT avoids probate.  Unlike a POD account, an RLT can provide for any number of alternate beneficiaries, so your assets avoid probate even if someone predeceases you.  An RLT can also provide long term protection from the creditors of your beneficiaries.  If you become incapacitated due to an accident or illness, your successor trustee can manage the assets in your trust and access your funds to pay for your care and that of your dependents.  A POD account may be good, but an RLT is better.  Both may have a place in your estate plan.
So What Do You Do?
Begin with the end in mind.  Determine your goals and priorities both during your life and at your death.  Anticipate your needs and the needs and challenges your beneficiaries may face.  Consult with an experienced estate planning professional to help you design a customized, comprehensive estate plan that suits your individual goals and needs.
If you want to discuss POD accounts, trusts or any other estate planning strategies, please call or email me to set up a confidential consultation.
The following article was first published to The Pros and Cons of Payable on Death Accounts and is republished from Stephen P Stewart Law. See more on:} Stephen P Stewart Law