It’s that time of year again – time to make a New Year’s resolution. This year, why not make one you know you can keep and that benefits you and your loved ones? As we usher in a new decade, make it a point to review your existing estate plan and make any necessary changes. To help you get started, an Overland Park estate planning attorney at Parman & Easterday explains why reviewing your estate plan should be this year’s resolution.
What to Expect from a Routine Review
For an estate plan to work as intended, you need to conduct routine reviews of that estate plan every so often and make any changes that need to be made. There are no hard and fast rules about how often you should review your plan, though most estate planning attorneys suggest a routine review every three to five years. During a routine review be sure to look at changes that need to be made to:
- Assets – your asset structure may change as your income and family size increase. The more assets you acquire, the more assets need to be protected, and eventually distributed, in your estate plan.
- Beneficiaries – your primary beneficiaries will likely change as you get married and/or have children or grandchildren.
- Fiduciaries –you need to review your choice of fiduciaries each time you review your estate plan. You may want to appoint a new spouse to a position or remove someone who is no longer willing or able to serve.
- Tax laws – the federal gift and estate tax laws are subject to change and when they do, they may impact your estate plan. For example, the lifetime exemption limit was dramatically increased in 2018 which may prompt you to transfer more wealth out of your estate right now than you originally planned to do.
When Is an Immediate Update Necessary?
Scheduled reviews are essential to keeping your plan current and functioning as intended; however, there are also some life events that should trigger a more immediate update to your estate plan, including:
- Marriage or divorce – your own marriage or divorce will likely trigger the desire to change beneficiary designations within your plan. The marriage of a child is also something that could trigger a review because your son/daughter-in-law could now stand to gain control over the inheritance you plan to leave your child.
- Birth and death of beneficiaries or fiduciaries — the death of anyone who is part of your estate plan, as a beneficiary or fiduciary, is cause to review your plan. The birth of a child or grandchild should also be specifically noted in your plan to ensure your beneficiaries are correctly identified and avoid confusion that could lead to litigation.
- Children reaching adulthood or a later specified age – once your youngest child reaches the age at which you no longer feel you have to worry about protecting his/her inheritance, you will want to decide how your children should inherit from your estate, either immediately or over time.
- Retirement – when you retire, a number of important changes will take place, starting with the change to your overall financial picture. Those changes warrant a review of your plan. In addition, if you have not yet considered the addition of a Medicaid planning component to your estate plan, now is the time to do so.
- Major change in assets – your estate plan should include provisions to handle shifting assets, but a major increase or decrease in the value of your assets, or the acquisition or sale of a major asset (such as your home or business), should give rise to a review of your plan to see how the change impacts your overall plan.
If you have not reviewed your existing estate plan in at least three years, make a New Year’s resolution for 2020 to sit down with your estate planning attorney and update your plan.
Contact an Overland Park Estate Planning Attorney
For additional information, please join us for an upcoming FREE seminar. If you wish to schedule a review of your estate plan, contact an experienced Overland Park estate planning attorney at Parman & Easterday by calling 405-843-6100 to schedule your appointment today.
If you do not yet have a long-term care component in your estate plan, consider adding one now to ensure you can afford the high cost of LTC if you need it in the future.
Possibly. Changes to your Will must be in writing and may require you to revoke your existing Will and execute a new one. A trust may be able to be amended without the need to create a new trust agreement.
One simple thing you can do is to always include successors and alternates within your plan. For example, if you create a trust, appoint at least one successor Trustee in case your original choice cannot serve.