05 March 2016

Facing Mortality: Using Tax Time for Estate Planning

It is that time of year again here in the United States. Time to round up my documents and pay my annual income tax to the Internal Revenue Department.

This year my husband and I decided to use a tax preparation service because many things changed in our income/expense stream in 2015 and it seemed like a good use of funds to have a professional help up sort things out.

As a part of using a professional service, I had to be more organized than usual this year. Normally I do the bookkeeping and household budgeting during the year and my husband does the taxes. So our normal document round-up process is very informal. I start gathering documents from banks, employers, and charitable organizations as they come in the mail. When my husband is ready to tackle the taxes, he gives me a list of the other information he needs to finish up and I dig through our (mostly) electronic files and come up with the needed numbers.

This year, since we wanted to try to make the best use of the tax preparers time, I made a checklist of the doucments we turned in and the date we handed them over. It took two tries to get all of the documents together, but now I have a handy list I can use in future tax seasons.

As I was looking at my list, I realized that it could serve a dual purpose. Much of what is in the information gathered for my taxes is also information that should be in my estate planning documents. Data on sources of income, banks, credit unions, investment services, addresses of current employers, retirement savings accounts, mortgage & home equity loans, and information about side or primary businesses are all important for my personal representative to have and to have quickly.

I'm going to sit down with my freshly filed 1040 and supporting documents and my copy of Erik Dewey's: "Big Book of Everything" and take advantage of the work I had to do for the tax man to start filling in the blanks in my estate planning documentation.

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