Ch-ch-changes: 9 Items to Look at When Reviewing Your Estate Plan
You have your estate plan, which is great. But how long has it been since you have taken a look at it? Have you had children, gotten married, gone through a divorce, experienced the death of a potential beneficiary, significantly increased or decreased your net worth, started a business, or experienced any other major life changes or life events? Although thinking about your own demise is not everyone’s favorite pastime, this checklist will put you on the right path to the necessary and regular review of your estate plan:
1. How Does Your Will or Trust Distribute Your Assets?
If you have experienced some life changes or events, you may want to rethink how you are disbursing your assets. It starts with you dusting off your documents and giving them a read to make sure the strategy you originally created in your disbursement is still relevant to today’s circumstances.
2. Who is the Trustee or Your Trust or the Executor of Your Will and Who are the Successors if They Cannot Act?
Again, read through your will and/or trust. Do you still want the original named executor/trustee and their successor(s) administering and disbursing your assets after your death?
3. How Flexible Are the Terms of Your Trust and Do You Understand Them?
You should understand and be comfortable with the terns of your trust. Some trusts are revocable, some are irrevocable. Some are revocable, but become irrevocable upon the occurrence of an event, such as the death of your spouse. Maybe you want to be able to amend your trust after your spouse’s death. These documents are legally binding, so make sure they reflect what you want.
4. Does Your Estate Plan Contain the Nomination of a Guardian for Your Minor Children?
If not, it should. But, what if you had more children since the last nomination or you are not so sure that the original guardian you nominated or their successor is still who you want responsible for providing for and caring for your children in your absence. Maybe it’s time to make a change.
5. Is Your Estate Worth $5.45 Million or More?
In 2016, the estate and gift tax exemption is $5.45 million per individual, meaning an individual can leave $5.45 million to their heirs and pay no federal estate or gift tax. This exemption amount can change at any time, but if your estate is over this threshold you may want to consider estate tax minimization or other advanced estate planning techniques.
6. Has Your Will Been Signed and Witnessed or Your Trust Been Signed and Notarized?
Maybe you went through the time and cost to have an estate plan prepared but never got around to actually signing it. And signing it properly. In California, a will must be signed by the testator (person creating the will for themselves) and witnessed by at least two disinterested persons while being signed. Cal. Prob. Code Section 6110. In California, a trust needs a signature, which better be notarized if you ever expect it to hold up in court or to be enforced by banks and financial institutions. Mobile notaries are very convenient and their costs are reasonable so there’s really no excuse not to take this important step.
7. Do You Want to Change Your Beneficiary Designations?
Read through not just your will and/or trust, but through all of your retirement plans (401(k)’s, IRA’s, etc.) and life insurance policies and confirm your primary and contingent beneficiaries. Determine the changes that need to be made and then change them if applicable.
8. Have You Reviewed Your Other Important Estate Planning Documents?
Don’t forget to review your general powers of attorney. This important document grants a person the authority to make financial decisions on your behalf should you become incapacitated. There is also your Healthcare Powers of Attorney, which provides guidance and grants someone the authority to make healthcare decisions on your behalf in the event you are unable. And, don’t forget your living will provisions (Advanced Directives), which provide your opinion involving important end of life decisions. Do the terms of these documents need to be changed?
9. Have You Titled Your Assets Appropriately?
Investment accounts, bank accounts, and real property can be titled in various ways. Joint tenancy, tenants in common, and individual registrations, are common forms of titling. Are these most appropriate for you, or should you be utilizing trusts or corporations (LLCs) to own your property?
Life changes and your estate plan should reflect these changes.