13 Smart Estate-Planning Moves

Follow this estate planning checklist for you (and your heirs) to hold on to more of your hard-earned money.

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About four years ago, Kelley Brooks’s husband, Chris, who was being treated for hypertension, died in his sleep. Like so many other couples in their 40s, they had talked about estate planning but never got around to it. “You think you have forever to do all that, but you don’t,” says Brooks, 49, of Bellingham, Mass.

Experts hear similar stories all the time, even as a deadly pandemic continues to raise awareness about the importance of estate planning. “People often underestimate how much it will cost if they don’t plan,” says Renee Fry, founder of Gentreo, an online estate-planning company.

For people nearly or newly retired, who potentially still have decades ahead for their assets to compound and grow, estate taxes are a huge concern, especially if Congress decides to move the goalposts again. It already did last year with new IRA rules that eliminated the stretch IRA, forcing some families to rethink their tax strategies.

The generous , now a whopping $11.58 million and rising to $11.7 million in 2021, may be next on the chopping block. The exemption is set to expire at the end of 2025—that is, if political and fiscal pressures don’t lead to a change sooner.

The large exemption has lulled many people into thinking they shouldn’t worry about estate taxes or other threats to their money, but they should, says attorney Martin Shenkman, a veteran estate and tax-planning attorney in the New York area.

“Anybody with wealth needs to plan,” says Shenkman, citing looming deficits that could hasten a change in the exemption amount. The federal gift and estate tax is currently 40% on amounts over the $11.58 million threshold, and some states also levy an estate tax. If the gift exemption is cut a lot, he says, it will shut down many ways people reduce their taxable estates.

Asset protection strategies that benefit you during your lifetime can also double as estate tax moves that preserve wealth for your heirs, he says.

“I’ve been jumping up and down about this because in difficult economic times, you tend to see more litigation,” says Shenkman, who uses several types of trusts to move money out of clients’ taxable estates. “When people are hurting, they look at every option to get money.”

So, how can you save as much as possible on fees and taxes and preserve the most for the people you leave behind? Consider these 13 estate-planning moves, which may be as simple as designating a different IRA beneficiary or as complex as setting up a trust.

Janet Kidd Stewart
Contributing Writer, Kiplinger's Retirement Report

Janet Kidd Stewart created The Journey, a nationally syndicated personal finance column that ran for more than a decade in dozens of U.S. newspapers. As a reporter for the Chicago Tribune and Chicago Sun-Times, she covered banking, derivatives, markets and economics. She holds bachelor's and master's degrees from the Medill School of Journalism at Northwestern University. Widowed suddenly in 2013, she joined online grief groups and began talking with other widows about survivor benefits and adjusting to a new financial reality. Now living and working in Minneapolis, she is compiling those stories, and her own, into a forthcoming book.