Some people don’t want to create or update their estate plan – it is unpleasant to think about death. But we nudge clients to review it periodically and keep it accurate. An estate plan is basically a map that explains how you want your personal and financial affairs to be handled in case of incapacity or your death, and it should be checked as your lives change and time goes by.
Reviewing your estate plan will alert you to any changes that need to be addressed. For example, you may need to make changes if it no longer meets your goals, or if your executor, trustee, or guardian can no longer serve in that capacity. Although there’s no rule about timing when you should review your estate plan, a quick annual review is wise, as changes in the economy and in the tax code often occur on a yearly basis. Every five years or when you have a big change in your life, we encourage a more thorough review.
You should definitely review your estate plan as soon as possible after a major life event or change. Events that should trigger a review include:
- There has been a change in your marital status (many states have laws that revoke part or all of your will if you marry or get divorced) or the marital status of your children or grandchildren.
- There has been an addition to your family through birth, adoption, or stepchildren through marriage.
- Your spouse or a family member has died, has become ill or incapacitated.
- Your spouse, your parents, or another family member has become dependent on you.
- There has been a substantial change in the value of your assets or in your plans for your money.
- You have received a sizable inheritance or gift.
- Your income level or requirements have changed.
- You are retiring.
Some Things to Consider
There are several questions we ask clients to think about:
- Who are your family members and friends? What is your relationship with them? What are their circumstances in life? Do they have any special needs?
- Do you have a valid will? Does it reflect your current goals and objectives about who receives what after you die? Is your choice of an executor or a guardian for your minor children still appropriate?
- In the event you become incapacitated, do you have a living will, durable power of attorney for health care, or a Do Not Resuscitate order to manage medical decisions?
- In the event you become incapacitated, do you have a living trust or durable power of attorney to manage your property?
- What property do you own and how is it titled (e.g., a trust, or outright or jointly with right of survivorship)? Property owned jointly with right of survivorship passes automatically to the surviving owner(s) upon death.
- Have you reviewed your beneficiary designations for your retirement plans and life insurance policies? These types of property pass automatically to the designated beneficiaries at your death.
- Do you have any trusts, living or testamentary? Property held in trust passes to beneficiaries according to the terms of the trust. There are up-front costs and often ongoing expenses associated with the creation and maintenance of trusts.
- Do you plan to make any lifetime gifts to family members or friends?
- Do you have any plans for charitable gifts or bequests?
- If you own or co-own a business, have you made provisions to transfer your business interest? Is there a buy-sell agreement with adequate funding? Would lifetime gifts be appropriate?
- Do you own sufficient life insurance to meet the needs of your family?
- Have you considered the impact of gift taxes, estate tax, generation-skipping and income taxes, federal and state?
