2023 Wealth Planning Checklist

January 27, 2023

Twelve key questions to ask yourself as we move into 2023.

The start of a new year can be an opportune time to consider your wealth plan and whether you are on track toward achieving your financial goals. A first step in this process is to inventory the components of your planning strategy. Here, we suggest 12 key questions you can ask yourself and explain the reasons why they are important.

1. Do you have a Will or Revocable Trust to properly dispose of your estate that names fiduciaries (such as guardians, executors and trustees)? If so, when was the last time it was reviewed or updated?

These documents represent your ultimate “financial plan” and are important for both tax and non-tax purposes.

2. Do you have Living Wills, Health Care Proxies and Powers of Attorney?

Sometimes overlooked, these documents allow you to name an “agent” to act on your behalf for either medical or business purposes if you’re incapacitated or otherwise unable to act.

3. How do you hold title to assets?

A common estate planning mistake occurs when married couples hold all of their assets as “joint tenants with rights of survivorship”; it may make sense for second homes and other vacation/rental properties to be owned by a limited liability company instead of in your name.

4. Have you properly named designated beneficiaries for your retirement accounts and life insurance?

Failing to do so can have unintended tax consequences in disallowing your ability to “stretch” retirement distributions over longer periods of time; in our view, life insurance should often be owned by an Irrevocable Life Insurance Trust (ILIT).

5. Do you own term life insurance?

Term policies can be a relatively inexpensive way to provide “income replacement” if an unexpected death occurs; in addition, permanent insurance can be employed as part of overall estate planning.

6. Do you own property and casualty insurance?

This type of insurance can be valuable for both liability and property protection purposes.

7. Are you saving for education through a 529 plan?

These state-sponsored plans allow you to save without tax consequences as long as distributions are used for “qualified educational expenses”; in some locations, contributions also provide a state income tax deduction.

8. Are you contributing the maximum amount to retirement accounts?

For 2023, you may contribute up to $22,500 ($30,000 if age 50 or older) to a company 401(k) plan and $6,500 to an IRA ($7,500 if age 50 or older).

9. Do you have a large estate (generally, for 2023, $12.9 million per individual or $25.8 million per married couple)?

If so, you may wish to take advantage of advanced estate planning strategies to minimize your future estate tax burden.

10. Do you contribute to charity?

A donor-advised fund can provide a simple and convenient way to satisfy your philanthropic objectives while minimizing your income tax burden.

11. Do you have a financial plan?

A number of factors should be evaluated to answer a common question: Do I have enough to retire? Your life expectancy, retirement age, cash-flow needs/large expenditures, investment assumptions, and much more should be considered.

12. Who are your advisors?

A complete list of your tax, legal, accounting, insurance and other financial advisors (complete with phone numbers and email addresses) should be available to other family members with instructions in the event of your death.

These are only some of the questions that may arise as you seek to assess your current situation and how well positioned you and your family are for the future. With the start to the new year, we encourage you to touch base with your advisors to explore appropriate planning steps. Your team at NB Private Wealth is always available to assist in these conversations.

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