Then there is the prevalent problem of some large insurance companies failing to pay out unclaimed life insurance policies to beneficiaries, claiming that under the insurance contracts they are obligated to do so only when the beneficiaries come forward. When the beneficiaries are not even aware of the existence of the policies, obviously they do not come forward, and years of premiums may have been paid for nothing.

The take-away lesson is that it is just as important to keep estate planning documents well organized and in a safe place, known to and accessible by your heirs, as it is to properly execute the documents in the first place. Any virtue can become a vice if taken to extremes, so this does not mean holding on to every scrap of paper that could conceivably be of interest to those you leave behind. Nonetheless, to possibly save your heirs a significant amount of money, time, and stress, at least the essential documents should be kept together, such as with your attorney, in a safe-deposit box, and/or at home in a fireproof safe that someone can access when the time comes. Instructions on how to dispose of your estate will not mean much if you have not left instructions on how to find the controlling documents.

Essential Documents to Organize
So what are these essential documents that you should have well organized and accessible? Individual circumstances vary, but the first document for most people is an original will. Dying without a will means leaving the determination up to the state as to how your assets will be distributed, and if there is some writing, but not an original document, probate proceedings could become needlessly contentious and drawn out.

In addition to a will (and any trust documents), what follows is a nonexhaustive, but reasonably comprehensive, list of other important documents, the existence and location of which should be known to your heirs:

• Marriage license–A surviving spouse is likely to need it to prove that he or she was married to the deceased before being able to claim anything based on the marriage;
• Divorce papers;
• Durable health-care power of attorney (for health-care decisions if you are incapacitated), a living will, any do-not-resuscitate order, and an authorization to release health-care information;
• Durable financial power of attorney (for financial decisions if you are incapacitated);
• Documentation of ownership of property, including housing, land, cemetery plots, vehicles, stocks, bonds, etc.;
• Proof of loans made and debts owed;
• List of bank and brokerage accounts, with account numbers, and any safe-deposit boxes with the location of corresponding keys;
• Tax returns for the most recent three years;
• Life insurance policies and 401(k), pension, annuity, and IRA documents; and
• List of user names and passwords for Internet accounts.

With a little bit of foresight and planning, you can greatly reduce the administrative burden on your family and heirs after you pass.

To help struggling taxpayers who owe back taxes, the Internal Revenue Service (IRS) recently unveiled a series of new steps to help people get a “fresh start,” to use the phrase invoked by the IRS Commissioner, with their tax liabilities. The general idea is to recognize the challenging economic environment the country faces while also keeping the tax revenue flowing in at acceptable levels. The focus is on changes to the tax lien system and other collection tools already used by the IRS that will make paying taxes a little easier on taxpayers.

Tax Lien Thresholds

The IRS will significantly increase the dollar thresholds for when liens are filed to a new dollar amount that will be in keeping with inflationary changes that have occurred since the number was last revised. Currently, liens are automatically filed at certain dollar levels for people with past-due balances.

A federal tax lien is no trivial matter. It gives the IRS a legal claim to a taxpayer’s property for the amount of an unpaid tax debt, and it can establish priority rights against certain other creditors. Since a tax lien can also adversely affect a taxpayer’s credit rating, taxpayers are well advised to arrange for the payment of taxes as quickly as possible.

Tax Lien Withdrawals

The IRS will make it easier for taxpayers to obtain lien withdrawals under certain circumstances, including the IRS’s determination that the lien filing was premature or that the taxpayer has agreed to an installment payment plan. To facilitate the withdrawal process, the IRS will also streamline its internal procedures to allow collection personnel to withdraw the liens.

Direct Debit Installment Agreements and Liens

The IRS is making other important changes to liens when taxpayers enter into a Direct Debit Installment Agreement (DDIA). For taxpayers with unpaid assessments of $25,000 or less, the IRS will now allow lien withdrawals in a few different situations: for a taxpayer entering into a DDIA; for a taxpayer converting a regular Installment Agreement to a DDIA; for a taxpayer already on an existing DDIA, upon the taxpayer’s request; and for a taxpayer demonstrating after a probationary period that direct debit payments will be honored.

Installment Agreements and Small Businesses

The IRS has made streamlined Installment Agreements available to more small businesses by raising the dollar limit to allow more small businesses to participate. Small businesses with $25,000 or less in unpaid taxes can participate. Previously, only small businesses with under $10,000 in tax liabilities could participate. Small businesses will have 24 months to pay.

Small businesses with an unpaid assessment balance greater than $25,000 may qualify for the streamlined Installment Agreement if they pay down the balance to $25,000 or less. But small businesses will need to enroll in a DDIA in order to participate.

Offers in Compromise

The IRS is also expanding a new streamlined Offer in Compromise (OIC) program to cover a larger group of taxpayers who can use the help. Taxpayers with annual incomes of up to $100,000 can participate. Participants must have a tax liability of less than $50,000, doubling the previous limit of $25,000 or less.

An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. As you might expect, it is something of a last resort. Generally, an OIC will not be agreed to by the IRS if the IRS believes, given the taxpayer’s income and assets, that the liability can be paid in full as a lump sum or through a payment agreement.

Hazards to a golfer’s health and safety that come most readily to mind involve swinging clubs and golf balls in flight, usually on unintended flight paths. But the sport also has other dangers lurking, including the garden variety slip and fall. When James, a golfer, sued a golf resort recently over such a mishap, his claim was dismissed, essentially because the particular risk at issue in his case should have been apparent to him and, as such, it was up to him to avoid it.

On an overcast and rainy day, James was playing golf with three friends at a private golf course. It began to drizzle early in the round, and by the 14th hole, the rain was coming down hard. Approaching the 15th hole, James and his friends discussed stopping play but decided to press on.

As James walked toward the green with one of his companions, they used stairs made of bricks and wooden railroad ties. James was familiar with the golf course, having played there on prior occasions. Although he had never before used the stairs leading to the 15th green, he had seen them.

After his friend walked down without incident, James followed and slipped on one of the first steps, breaking his ankle. At the time, it was raining and James was looking down, talking, and holding his putter in his right hand. Without incident, the other two in the foursome had taken an entirely different route on the grass, avoiding the steps.

James’s lawsuit did not fail for lack of effort, in that he enlisted an expert witness to buttress his theory that the resort’s negligence had caused his injury because the stairs had not been made slip resistant in wet conditions. The argument never got off the first tee, as it were, because the expert relied upon building code requirements pertaining to making “floor surfaces” slip resistant and the federal court hearing the case ignored the entire line of reasoning as “irrelevant.”

As the court saw it, it was obvious that such a building code requirement was never meant to apply to an outdoor golf course. For that matter, the stairs embedded in the ground at the 15th hole were not even part of a “building or structure” to which building codes apply.

Because of the court’s dim view of the expert evidence offered, James was left exposed to the resort’s contention, with which the court readily agreed, that James could not blame his unfortunate slip and fall on the resort or anyone else. In legal parlance, James had “assumed the risk” of walking on the wet stairs. The risk was obvious, inherent in the activity, and not so serious as to justify placing a greater precautionary burden on the resort operating the course. The court noted that this legal principle “facilitates free and vigorous participation in athletic activities.”

A major health services company with thousands of employees overhauled its pension plan some years ago. As it explained to the employees at the time, their
then-existing benefits would all be converted into a hypothetical lump sum, which would constitute the opening account balance for the new plan. That amount
would then grow by a percentage of the employee’s pay each year. It all sounded as though there was nothing to which the employees could object.

But what was not explained to the employees, and what eventually led a class of employees to sue under the federal Employee Retirement Income Security Act
(ERISA), was that the beginning balance for many employees with long tenures at the company would be as little as 50% to 70% of the amounts built up under
the old pension plan. Calculated in such a manner, the pension balances for such employees could take years just to get back to the levels of the old plan.

The now illegal practice that led to the litigation has happened often enough that it has a name: “wear-away.” The employer’s creation of “underwater”
beginning balances effectively tells employees that prior pensions were overpaid and that before they can receive compensation under a new pension plan, they
effectively must work off a debt, or “wear it away.”

When the case ultimately reached the U.S. Supreme Court, a majority of the Justices agreed with the plaintiffs that if the company had deliberately provided
misleading and incomplete information to its employees, in violation of ERISA, a monetary remedy was appropriate. This was a resounding win for the
employees, given some earlier case precedents making it difficult to recover monetary awards for employment benefits lost due to employer violations of their
duties.

In theory, we are all in favor of saving time, labor, and space, not to mention avoiding the stress and anxiety that can come from leading complicated and
disorganized lives. In the realm of personal finance, these are all good reasons to resolve to become more simplified and organized, but saying and doing are
two different things. It may help move the process along to break the job up into some very specific things that you can do in addition to making an overall
change in attitude toward your finances. Minutes spent doing this ahead of time could save hours and many dollars later.

Direct Deposit

Who knows, you may be one of those people who like to have the check in their hands for their pay, pension, or Social Security benefits so that they can
personally take it to that bank teller they have known and trusted for years. Still, arranging for a direct deposit into a bank account is safer, easier, and more
convenient, and, at least by a small margin of time, it allows you to get access to your money more quickly.

Recurring Bills

If the merchant, such as a utility or insurance company, allows the practice, you can pay recurring bills with an automatic withdrawal from your checking
account or with a charge to a credit card. In the case of the former, don’t forget to record the transactions in your check register. In the same vein are online
banking services that allow you to pay bills online instead of by snail mail.

Online Banking

Aside from bill paying, consider doing virtually all of your banking online, making it effectively paperless. You can go online to handle such tasks as reviewing
deposits and withdrawals, tracking balances in your accounts, transferring funds between accounts, and receiving statements.

Automatic Savings

It is simply common sense that if you set up a system in which something happens automatically rather than only when you think about it and take action, the
“something” is going to occur with greater consistency. So it is with saving for the future. Arrange with your employer or bank to put a predetermined amount
of money into an account or an investment vehicle on a regular schedule. Another bonus for this approach as an investment strategy is that over the long run, it
might provide a better return than jumping in and out of the markets.

Consolidation

You might want to streamline your finances by consolidating what could be an unwieldy number of accounts and credit cards. By doing so, you can better
monitor everything, lighten the load of paperwork you receive, avoid some fees, and perhaps even obtain better deals. If you are combining deposits at one
banking institution, though, be careful not to exceed FDIC deposit insurance limits ($250,000 for each ownership category in a single institution).

Up-to-Date and Available

Even if you have been diligent about making a will, review it periodically to make sure it still conforms to your wishes, especially if there have been any
intervening major events that might prompt a change. The same goes for any number of important financial documents, such as life insurance policies and
retirement accounts identifying beneficiaries and providing directives about what happens to bank accounts and other assets if you become incapacitated.

All of the above may not matter much if nobody can find the documents, so keep them in a secure place, ideally in a central filing system. Make sure to let your
family members know where they can find your important documents.

If a Disaster Strikes

It is not a pleasant scenario to contemplate, but what if in an emergency you had to evacuate your home in moments and all of your carefully gathered and
organized financial material were left behind? One way to prepare for this possibility is to keep copies of the important documents, or at least lists of account
numbers and similar identifying information, on a secure website that you could access from any location.

For you to claim a federal income tax deduction for a charitable donation valued at $250 or more, you must obtain from the recipient of the donation a
“contemporaneous written acknowledgment” letter. Failure to obtain such a letter can result in a disallowance of the deduction by the IRS.

The acknowledgment letter, which may be in the form of a thank you letter to you as the donor, should include the following information:

* the name and address of the recipient of the donation;

* the amount of a cash gift or, if not in cash, a description of the donation sufficient to identify the nature of the gift; and, if applicable,

* a statement that no goods or services were provided by the recipient in return for the donation, or a description and good-faith estimate of the value of any
goods and services that were provided by the recipient in return for the donation.

As some donor taxpayers have discovered to their consternation, including some who have made very large donations, the timing of the receipt of the letter can
be as important as its contents. The rule to bear in mind is that you must obtain the acknowledgment letter by the date of the filing of the tax return for the year
in which the charitable contribution was made. You run the risk of being denied the deduction in assuming that it will suffice if the letter has been promised or
will be received after the return has been filed but before you would ever hear from the IRS.

Recently, the Chief Counsel for the IRS underscored the need for having the donation acknowledgment letter in hand (or in your e-mail inbox) when you file
your return in order to qualify for the deduction. The federal Tax Code actually has a provision that states that the donor is not required to obtain an
acknowledgment letter if the recipient organization itself files a return that meets applicable requirements and includes the required information about the gift.
Nonetheless, because no implementing regulations on this law have yet been issued, the Chief Counsel determined in a memorandum that a donor cannot take
this route to claim the deduction.

The takeaway lesson for donor taxpayers is to be sure that you receive your acknowledgment letters before you file, and don’t make the mistake of assuming
that the IRS will cut you some slack if, for whatever reason, that deadline is missed.

For some people, life insurance may not spring to mind immediately as an effective estate planning tool. A life insurance policy remaining in the estate of the
insured is subject to federal estate taxes. However, when carefully crafted and put in place with the guidance of an appropriate professional, there is a way both
to obtain the familiar benefits of a life insurance policy–providing a measure of financial security for the beneficiaries–and to remove the policy’s proceeds
from exposure to the estate tax. The vehicle is called an Irrevocable Life Insurance Trust (ILIT).

Here is how an ILIT works. At the core of the trust is the life insurance policy itself. The “grantor” of the trust makes annual gifts of sufficient money to pay the
premiums on the policy and to cover administrative costs, unless the trust is funded by other assets.

The legal owner of the policy is the trust, not the grantor, which explains how the insurance policy is treated as being outside of the grantor’s estate. The insured
cannot personally benefit financially. Another plus arising from the fact that the trust owns the policy is that this protects the funds from possible claims by the
beneficiary’s creditors.

As with any trust, an ILIT must have a designated trustee to manage and administer it. Typically, the trustee is a bank or a trust company, but practically any
person or entity other than the grantor can serve in that role. The trustee establishes a bank account into which the gifts will be deposited for use in paying the
premiums. The trustee is also responsible for a variety of administrative duties, including giving notifications to the beneficiaries under the policy and filing the
ILIT’s tax return.

Upon the death of the grantor, it is also the trustee who oversees distribution of the policy’s proceeds, in accordance with the grantor’s wishes as expressed in the
trust. This distribution can be all at once or spread out over time.

One of the appealing features of an ILIT is that it can be closely tailored to fit the wishes of the grantor regarding the conditions and circumstances for paying
out the proceeds of the ILIT. There are almost as many possibilities as there are individual grantors. For example, if the grantor is in a second marriage, the ILIT
proceeds might go to any children from the first marriage, with the rest of the estate going to the second spouse and the children from the second marriage. It is
also possible for the grantor to specify and achieve very specific purposes for the ILIT proceeds, with strings attached if desired. Think carrots and sticks: A
beneficiary might be in store for proceeds from the ILIT only if he or she satisfies certain conditions or meets certain goals. On the more negative side,
misconduct by a beneficiary could be used as an effective disqualification.

Bear in mind that an ILIT must comply with certain government rules and regulations if it is to achieve the desired results. Thus, aside from the potential
complexities of the instrument itself, the assistance of a professional is a must in navigating the government’s requirements for an effective ILIT.

Nate Thoma is not a lawyer, but he is a soft-spoken, yet confident, small investor in Washington Mutual, the big bank that was seized by the federal government
in 2008 and ended up in bankruptcy. As for so many other investors, Nate’s stake in the bank was wiped out. Nate became something of a folk hero during that
tumultuous period when big banking institutions were failing and the little people always seemed to get the short end of the stick as the messes were being
cleaned up.

Nate’s big moment came when, after he had spent untold hours analyzing the Washington Mutual case, the federal bankruptcy judge let him have his say–and at
some length–in a hearing that culminated in an investigation of trading by some very large hedge funds and in the rejection of a bankruptcy plan for the bank.

The issues made for a real legal thicket, especially for a novice to sort out. Essentially, Nate’s complaint, on behalf of the many small investors in the bank, was
that the hedge funds were buying up the bank’s trust preferred securities that go to the front of the line for any money distributed from the bank’s estate.

The hedge funds also owned the bank’s bonds, so their dominant ownership of both classes of securities would help them control the course of the bankruptcy,
to their benefit and to the corresponding detriment of the little guys. Nate’s oral argument and his accompanying 33 pages of supporting documents no doubt
played a role in an eventual favorable settlement between small investors like himself and the hedge funds, a settlement that may also have shown the way for
the bank’s exit from bankruptcy.