Not only is it important to establish an estate plan but it is also vital to revisit your plan regularly. Here are a dozen points to consider when reviewing your plan.
- Do you have a will and powers of attorney for health care and property? These are part of every complete estate plan. With health-care power, you choose an agent to act on your behalf if you become unable to make your own decisions. With durable power for property, you select an agent to act if you are incapacitated and can’t sign a tax return, make investment decisions, make gifts or handle other financial matters.
- Do you need to change any beneficiaries, executors, trustees, guardians or others named in your documents? Are all still living? Can someone you recently found fill a role better?
- Any updates needed to addendums to your will that specify who gets what of your personal property? A common mistake to avoid is when a will mentions addendums for personal property but then the addendums don’t even exist.
- Did you move to a different state since the execution of your estate documents? If so, you may want to seek out a local estate attorney to check any legal differences for planning between your old and new states.
- Do you still need your trust documents or can you decant, which allows you to change some provisions? Consider this technique of emptying the contents of an irrevocable trust into another newly created trust if you are unhappy with your irrevocable trust. Not all states allow decanting. You may also want to discuss possibly moving assets out of a living trust (where a trustee holds them, a technique sometimes used to avoid probate) and holding them in the name of an individual. Also, check when your life insurance expires. Consider how long to keep it if you think you might outlive the policy.
- Have your children passed the ages specified in a children’s trust (in which you designate money for such specific purposes as education, home down payments or weddings once the kids reach stipulated ages)? If your estate documents call for a trust to give children access to money at certain ages after you die, you may be able to delete that language if the kids are older than the specified ages.
- What happens if one of your kids gets divorced? A trust can help you protect assets for your child or grandchild.
- Do you have heirs with special needs? Don’t assume typical estate documents help such an heir. Seek out a financial advisor and attorney who specialize in this planning.
- Check beneficiary designations on brokerage accounts, insurance policies and retirement accounts. Anybody you don’t want there?
- If you filled out a brokerage account application (or any beneficiary designation), understand the firm’s policy when one beneficiary dies before the others. If you want the share of the assets to pass by bloodline—to the deceased’s children, for example—you may need to put in language specifying per stirpes (distribution of property when a beneficiary with children dies before the maker of the will). Otherwise, the remaining listed beneficiaries may simply divide the assets.
- Often a parent names a child on a bank account so the child can access or use the money if the parent can’t act. Understand that if you name your child as a joint owner on an account, the money passes to your child no matter what your will dictates. The child splitting the money with someone else constitutes a gift, though one probably is not subject to gift tax now that gifts of less than $5.34 million aren’t taxed. Still, think carefully so you keep the family peace.
- Do your heirs know where to find all your important information? Let someone know the password to the app where you keep all your passwords—you must remember digital assets now, too.
As with all of our blogs, the content provided is general in nature and for educational purposes. To seek advice about your specific scenario, please contact us and we will be glad to help you.
“12 Estate Planning Must-Dos” FMeX. 2018.
