Reviewing your Estate Plan: Five Areas to Consider

Jackie Bedard
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For many, the month of January signals a fresh start and a renewed commitment to creating new resolutions for the upcoming year. And while typical New Year's resolutions involve cultivating better eating, exercise, or sleeping habits — it may also be a good time to consider reviewing any changes to your estate plan from the previous year. Contrary to popular belief, creating an estate plan is not just a one-time occurrence. In fact, I recommend an annual review of your estate plan to ensure it stays current and works as intended. Here are five important areas to consider when updating your estate plan.

Health

Changes in your health may warrant significant changes to your estate plan.  For example, if you were just diagnosed with a chronic illness which may require a future need for long-term care, your estate plan should provide instructions for the kind of medical care you would like to receive. In the event you become incapacitated, it is critical to review the agents for whom you have appointed to manage your healthcare directives. Even if your health is in good shape, it is still important to revisit these decisions and ensure that the individuals selected fully understand your plan and the responsibilities associated with their roles.

Family

Marriage, divorce, birth, and death are huge life events that affect your estate plan. For instance, if you have a new child or grandchild, you may decide to add them as new beneficiaries to your estate plan. Similarly, if you recently remarried, you may want to name your new spouse as the primary beneficiary on all of your accounts and remove your ex-spouse from any prior estate planning documents. The same holds true if you have any children in the middle of a divorce: it is likely you will want to remove your ex-son or ex-daughter-in-law from your estate plan. Another thing to consider is that if one of your beneficiaries has passed, you will be advised to name an alternate beneficiary in his or her place. Reviewing these family changes on an annual basis will ensure that your plan continues to protect the ones you love most.

Retirement

Estate planning is a key component of a successful retirement. Thus, if you are considering retirement, it is essential to take a thorough account of your estate plan and your finances. Due to the source of your revenue changing, it may be time to review your options with a financial advisor and ensure your assets are appropriately titled.  Your retirement accounts are some of the most valuable assets you own, and it is crucial to ensure these assets are maximized and planned for in a way that is beneficial to your loved ones. You may also consider opening an IRA Trust to leave your family well-protected after your passing. Regardless of your goals, reviewing your estate plan in retirement can help you clarify your financial goals for the future.

Location

A change of location can also prompt you to revisit your estate plan.  If you have moved to a different state from where you initially established your estate plan, it's essential to review your plan to ensure it reflects the laws of the state in which you currently reside. Given that the laws for creating a will or trust vary from state to state, it's important that your estate plan is updated and functions properly. Additionally, if you own or purchase property in a different state (outside of where you completed your estate planning), it is possible that the property may be subject to probate in the state in which it is located. In order to avoid the inconvenience of an out-of-state probate process, placing this property in a trust may be a possible solution to consider. Above all, reviewing your estate plan after moving out-of-state will ensure that it provides the maximum amount of protection for you as well as your loved ones. 

Estate Tax Laws

Recent changes to estate tax laws could warrant a review of your estate planning documents. As of 2018, the amount you can pass free of estate taxes is $11.2 million dollars. However, the new tax laws come with a built-in expiration date of December 31, 2025. While most individuals may not need to worry about exceeding this amount, it's important to remember that your combined estate consists of all of your real estate holdings, bank accounts, retirement accounts, business interests, and life insurance policies—which together—can add up quite significantly. For families looking to pass on their wealth to the next generation, it's imperative to ensure that appropriate backup estate tax provisions are used appropriately.  For individuals with older estate plans, removing complicated estate tax provisions that could be further simplified due to recent estate tax rules can also be helpful. Estate taxes are continuously changing, and reviewing your plan to make sure it is structured properly will help you and your family avoid sudden surprises down the road.

Make a Commitment to Protect Your Loved Ones in 2018

As you reflect on your loved ones and the time that you spent together over the holidays, make 2018 the year that you make sure your family is protected in the way that you want them to be protected. Like many other areas in life, estate plans must be updated so that they can continue to provide the utmost protection for you and your family. If you need any assistance creating an estate plan or conducting a review of your existing estate plan, please contact our office at (919) 443-3035.

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