We are talking about the importance of keeping estate plans up-to-date. It's an easy thing to forget -- we don't watch our wills and trusts the same way we do our IRAs and 401(k)s. A will may not be sensitive to market conditions or Federal Reserve interest rate deliberations, but it does need some tending. Most estate planning professionals recommend at least an annual update, and that includes making sure your beneficiary designations are current.
In our last post, we talked about a few components of an estate plan that should be included in any review. Another account that people may overlook is the Health Savings Account. While HSAs have been around for some time, now, not everyone considers them part of an estate plan. In truth, they can be very useful tools for estate planning and retirement planning.
HSA accounts are available to anyone enrolled in a high-deductible health plan. The deductible limits for individuals and families are set by the federal government. Currently, an individual's deductible must be $1,300 or higher; a family's must be $2,600 or higher.
An HSA account allows you to set money aside, tax-free, to use on medical expenses now or in the future. There are limits to the amount you can set aside, and not every medical expense may be covered. Still, when the money is withdrawn to pay for a qualifying medical expense, the withdrawal is tax-free. Better yet, the balance rolls over to the next year.
As they say in infomercials, though: But wait! There's more!
We'll finish this up in our next post.
Source: Internal Revenue Service, Health Savings Accounts and Other Tax-Favored Health Plans, for the 2014 tax year