As the weather gets colder it’s time to take stock and some much-needed financial housekeeping. A few simple steps and phone calls could help you get your house in order—and more importantly, stave off some hassles for your loved ones should something happen to you.
Check Your Account Titles
Idaho is a community property state, which means that married couples share assets and property equally. In 2015, a new account registration became available in Idaho to avoid confusion about the cost, or tax basis, of an asset when the first spouse dies.
Community Property with Rights of Survivorship is beginning to replace the standard Joint Tenants with Rights of Survivorship as the account title of choice for married couples. Community property allows a tax basis upward adjustment of 100 percent of the assets and property held in a marriage upon the death of the first spouse. A higher tax basis may mean fewer capital gains taxes when the asset is sold.
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Check with your tax advisor and legal counsel to determine if a this is right for you — in many cases, only a simple form and signatures are required to switch the title.
Check Your Designations
Now is a great time to make sure your beneficiary designations are current and up to date. Accounts that commonly have beneficiaries include retirement plans, life insurance policies, and employee stock plans. Correct designations will prevent assets from passing to an ex-spouse or deceased relative.
Consider Other Options
Finally, a word about Transfer on Death and Pay on Death accounts. These accounts offer an inexpensive and convenient way to transfer assets to another individual, but they are very limited in scope and are no substitute for a will or living trust. Consult with your legal counsel and financial advisor to determine which options are right for you and your family.
Financial stewardship involves some planning, work and ongoing monitoring to avoid unintended consequences. The correct account registrations and beneficiary designations will create a harmonious balance that will keep your money working harder, both now and after you’re gone.
MARK DALY IS AN INVESTMENT MANAGEMENT ANALYST AND PARTNER IN THE PERPETUA GROUP. MARK@THEPERPETUAGROUP.COM.