So you’ve established an estate plan with your attorney — made the tough decisions, written a will, and possibly created a trust. In an ideal world, it’d be time to simply “set it and forget it,” but unlike the rotisseries in those famous infomercials, you can’t completely forget about your estate plan. Because, simply put, things change. And if you want your estate plan to reflect those changes, you’ll have to review your estate planning documents from time to time.
Read on to find out exactly what you need to review.
Why do you need to do a review?
From a legal perspective, you should review your plan with your attorney to ensure that you’re minimizing estate tax, avoiding probate, and taking advantage of new opportunities. Laws and regulations change at least in small ways each year, and every once in a while there’s a sea change in estate law. There may be some major opportunities based on new regulations to create a more effective, efficient estate plan that optimizes how your financial assets are dealt with.
On a personal note, reviewing your estate plan is an opportunity to make sure it falls in line with your final wishes. You may want to alter who receives which assets or the size of their inheritance. Your charitable goals may have changed and so you want to shift what’s donated to different organizations. Your family and relationships evolve, and this is a chance for your plan to reflect what’s happened.
How often should you review your plan?
You don’t need to be hypervigilant about checking in on your estate plan. All things being equal, you should plan to revisit your full estate plan at least every three to five years.
Of course, life has a tendency to throw curve balls, so you may need to review everything sooner than that if there is a major life change in your family, you have a change of heart regarding your wishes, or there is a significant change in estate or tax law.
What documents should you review?
This isn’t an exhaustive list, and you should make sure and talk to your attorney and accountant before making changes. That said, here are the most important items to review:
1. Power of Attorney and Health Care Advance Directives
Being a representative under a financial power of attorney or a health care advance directive is an important role to fill, so it merits revisiting. These documents set forth a list of individuals to whom you delegate authority to make decisions on your behalf (whether financial or related to your healthcare) if you are unable to do so.
It’s a major responsibility, and the people chosen should be those most aligned with your personal interests. As relationships change, so, too, may your choice of who will represent you. Other life events, such as someone moving further away, death, or illness may necessitate choosing another representative as well.
It’s important to confirm the executor (the person who carries out the will) and guardian (the person you nominate to care for your minor children if you’re unable to) of your will, as well as the beneficiaries.
If you have a trust, it will take care of many aspects of your estate plan, so reviewing a will becomes more important where there’s not a separate trust.
In many cases, a will can simply be amended, though if there are larger changes, you may need to revoke the old will and execute a brand new one.
Perhaps a trust has been drafted as part of your estate plan. Usually that document takes into account the potential for future changes in your situation. However, there are unexpected circumstances, whether legal or personal, that may merit changes. Of course, your ability to update the trust depends partially on whether it’s revocable or irrevocable and is something to discuss with your attorney.
When you reconsider your estate plan, it’s a good time to review who has been established as the trustee and beneficiaries of the trust. Look at how all of your beneficiaries are receiving your future assets, and whether you’d like to shift how things are being divided or the recipients of your assets.
Finally, the most important part of having a trust is ensuring that it is fully funded. Assets that are not titled to your trust or that do not pass via beneficiary designation are subject to probate unless those assets have a value under $100,000. If you aren’t sure whether your trust is funded, you should speak with your attorney to determine what steps may need to be taken to transfer your assets to your trust.
Though beneficiaries are named already in your will or trust, it’s important to understand that beneficiary designations listed on any of your assets will control the distribution of that asset at your death. You should regularly review your beneficiary designations, as they are an integral part of your estate plan.
If you’ve opened any new accounts, you’ll also want to double check that the account ownership or beneficiary designation conforms with your estate plan. You should also double check that your real estate is titled in a way that most benefits your estate plan.
Your attorney can offer guidance on the most efficient strategy for your beneficiary designations and real estate ownership based on the overall goals of your estate plan.
5. Estate Tax Opportunities
Your attorney and accountant can help you know whether there are state or federal regulations that have changed that may affect your estate plan. Things like estate tax exemptions, interest rates, or gains or losses in accounts can all mean opportunities you may be able to take advantage of.
Reasons Your Estate Plan May Need to Change
- Birth or adoption of a new child or grandchild
- A child or grandchild reaches adulthood
- Education funding for a child or grandchild
- Death or change in circumstances of the guardian named in your will for minor children
- A family member passes away, becomes ill, or becomes disabled
- Changes in number of dependents, such as the addition of caring for an adult
- Marriage or divorce
- Illness or disability of your spouse
- Your financial goals shift
- Purchasing a home or other large asset
- Purchasing real estate in another state
- Borrowing a large amount of money
- Large increases or decreases in the value of assets, such as investments
- A large inheritance or gift
- Change in your life or long-term care insurance coverage
- Changes in federal or state laws covering taxes and investments
- Death or change in circumstance of your executor or trustee
- Career changes, such as a new job, promotion, or if you start or close a business
- Moving to a new state or country
Work with Us
With estate planning, there are a lot of t’s to cross and i’s to dot. Work with an attorney here at THK to make sure that you’re staying up-to-date with your estate planning, especially if there’s been a major change in your or a loved one’s life recently. And if you haven’t set up parts of your estate plan, get in contact with us to ensure you have everything taken care of.
Author: Kahlyn N. Ashcraft is an estate planning, estate administration, and elder law attorney at THK Law. Kahlyn helps clients with wills, trusts, special needs trusts, guardianships, powers of attorney, and long-term care planning including Medicaid planning.
You can contact Kahlyn by calling 574.232.3538 or email firstname.lastname@example.org.
Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.