How to do an Annual Review

You did it! The taxes are done. It is tempting to shove it all in a file cabinet and forget about it until next year. Don’t do that – yet.

Have you ever looked at all that information in your taxes? You should! It can be very valuable if you want to get healthy – in a legal sense.

Your taxes are a fantastic summary of your financial information. Armed with that summary, now is the best time to sit down and perform a top to bottom review of your legal and financial situation. It’s an annual legal review, and we recommend everyone do it.

This is preventative legal medicine. Most people only think about legal issues when they have a crisis on their hands.  Yet you can avoid a lot of legal problems just by using a little preventative medicine.

We created this free legal guide you can follow to keep your legal house in order. It works like a checklist of things to review, and tells you what you can do now.

We recommend everyone go through this list each year to assess their legal and financial situation.   And tax time is by far the best time to tackle this job.  So click on this link to start reading today.  And feel free to share this with friends and family who may need their own preventative legal medicine.

Preventative Legal Medicine

Far too many people see a lawyer only when they have a crisis on their hands.  Yet many legal problems can be prevented by seeking sound legal advice before a crisis develops.

It is much easier and less expensive to prevent a problem than to fix it.  And there are several preventative measures you can take without seeing a lawyer.  You can place yourself in a relatively safe position simply by spending some time every year to review your financial and legal situation.

We are attorneys who believe in preventative medicine.  Just as you should practice preventative medicine for your body’s health, you should do the same for your legal and financial health.  We believe everyone should regularly assess their legal and financial situation, make sure they are protected from possible legal hazards, and plan to avoid a crisis.

This guide provides a basic list of things to review each year, along with steps you can take to protect yourself.  Review it every year, and make sure you are healthy – legally speaking, that is.

Step by Step to Reviewing Your Legal Situation

Here is a step by step guide to things you should review (or at least think about) when you do your annual legal review.

Store Your Documents – the Right Way

You need a safe place to store your most important legal documents. Even in our increasingly digital world, you need some things in hard copy form.

We wrote a separate blog post describing the types of documents you need to protect, and where you should protect them. Click that link to read the details.

This is not flashy or interesting, but it is important.

Your Assets – Part 1

If you died tomorrow, would your loved ones be able to figure out what you own, how much you own, and where it all is? Do your family a favor and keep a comprehensive list of all your assets, including insurance policies and real estate.

List each one, and the holder of the account or location of the property. Provide account numbers and contact information. It would also be helpful to include the estimated worth of those assets.

You should review this list every year and revise it (hopefully upwards!). You should read our Free Legal Consumer Guide about Wills. At the end is an example of a letter you can use to inform your heirs of everything they need to know to make their job easy.

Here are things you should include in your list: bank accounts, retirement accounts, any other investment accounts, stocks, bonds, insurance policies, real property, and valuable personal property.  You should probably keep a list of debts too, even though you may prefer not to think about them.  Your heirs will need to know.

Your Assets – Part 2

You don’t have all your eggs in one basket, do you?  Are you properly diversified?  Do you have a nice mix of stocks, bonds, and other asset classes?  If your assets are too heavily concentrated in any one spot, think about diversifying.

If you don’t know why this is important, make time to see a financial planner soon.

Taxes

Your taxes are a great summary of your financial situation.  Therefore, you should pay some attention to them even after you mail that envelope to the IRS.

Did you owe taxes?  Why? At the very least figure out if you need to adjust your withholdings for next years taxes.  If you owed or got a big refund it may be time to adjust your withholding.

You also may want to adjust your withholdings if you had a big change in your life.  Did you buy a house?  Has one of your children turned 19?  Did your marital status change? Any change like this could change the refund your will get next year.  Cleary you don’t want to end up with a big tax bill.  But a big refund isn’t a good thing either.  After all a tax refund is just an interest free loan to the Government.

Keep copies of your last 7 years of tax returns.  The IRS can go back 7 years to audit you (and even longer if they suspect fraud).

Your Will

Do you have one?  If so, review it.  Make sure it is still relevant.  If you need changes, see your attorney.

If you do not even have one, it is past time to see the attorney.  Getting a will done is simple and inexpensive.

Read our Free Legal Consumer Guide about Wills on our website, so you can figure out what you need to do now.

If you find yourself with significant assets to pass on, you should find out if you need a trust.  Call us for advice and we will tell you, and we will steer you to reputable attorneys who can help you get a good trust that protects your assets.

Power of Attorney & Living Will

A Power of Attorney grants power to another person to manage your finances if you are disabled.  A Living Will contains your wishes regarding medical care if you are disabled.

If you do have them, review them and make sure they are still relevant.  Are your appointed agents still local?  Are they still the right people to have that power?  If you do not have these items, at least spend a few minutes thinking about whether or not you need them.

Insurance 

Are you covered?  Are you covered enough?

These are two very important questions you need to ask if you want to live through a crisis if one occurs. Insurance is all about preventing a crisis.  Make sure you have it, and have enough to cover you.

Read our blog post about insurance coverage here. We list each type you should have, and we also suggest a decent amount of coverage that should cover most people.

Check to make sure your beneficiaries are up to date?  This is especially important if you have had major life change like a divorce.  While you are at it check  the beneficiaries on your retirement and investment accounts.  Is it time to add the kids as alternative beneficiaries?

Your Credit Report

By law, you can receive one copy of your credit report free every year.  Get it.  See what is on it.  Is there anything unusual?  Make sure nobody is trying to steal your identity.  Plus, a credit report is a nice back up list of your debts and assets (for your family to use if you are gone).

Go to www.annualcreditreport.com to get your free credit report.  This is the government sponsored central site for requesting your credit report.

To further protect your credit consider a credit freeze.  This will make it harder for an identity thief to take out debt in your name.  For more on this see our articles on How to Freeze Your Credit.

Your Resume

How secure is your job?  It pays to keep an updated resume in case you find yourself needing it.  Review your qualifications and job history.  Add anything new.

Your Budget

Do you have one? Do you follow it? Set aside some time to do a budget. A great place to start is our CPA’s Askey, Askey & Associates Financial Tools Page.

Do You Need to See an Attorney?

Do you need legal advice about these issues or anything else in your life?  Are you starting a new business, contemplating buying real estate, or making a major life change that has legal ramifications?

If so, this may be the time to see an attorney to make sure you take the right actions and get it set up right.  Remember, it is a lot less expensive to pay an attorney for preventative action than for fixing problems.

Conclusion & Next Steps

We hope you were able to conduct your own annual legal review, and we hope you find this list useful and helpful.

If you do need an attorney, please consider us.  We want to be your family attorneys, and we would like to help you avoid problems before they start.  It is a pleasure to see clients when they are not having a problem.  We don’t get to do that enough.

Most people don’t think ahead and practice preventative legal medicine.  You should.

See our guide 5 Easy Steps to Protect Your Family From Legal Troubles for more information.

Want to know more? Discover what you need to know about Maryland law. Click here to see our Free Legal Consumer Guides and get answers to your questions today. Know your options. Be informed. Protect yourself.

Need an attorney? Please contact us for a consultation today if you need an experienced lawyer in Waldorf and Lexington Park for your legal case.

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