When it comes to estate planning, most people would prefer to think about literally anything else. Contemplating your death is not exactly a day at Six Flags.
Even if you did the responsible thing and composed a will or formed a living trust, you can be forgiven for not wanting to revisit it on a regular basis.
Unfortunately, an estate plan is not something you can set and forget. Here are four crucial reasons to check in regularly with your estate planning lawyer.
The Right Fiduciary
Every estate plan requires a fiduciary of some kind. A fiduciary takes control of assets for someone else’s benefit. In the case of an estate plan, this is usually the executor of a will or the trustee of a living trust. The executor’s job is generally done when the assets clear probate. A trustee’s role might continue indefinitely or until a specified time.
The risk here is that a fiduciary could become unsuitable. An elderly executor might pass away or become incapacitated. Your Certified Public Accountant could be designated as trustee, but if your professional relationship with the CPA ends, that might become awkward or inappropriate.
Even if your executor is a spouse or family member, relationships sometimes sour. The trustee could be revealed to be untrustworthy.
Conversely, people who might not have been a qualified fiduciary when you made the plan might become qualified with time. The obvious example is a minor child who comes of age.
Fiduciaries are bound by law, but you do not want your heirs to end up in court because you left the wrong fiduciary on your plan. Check-in with your estate planning attorney regularly to make sure you have the right fiduciary on the books.
Tax Laws Change Every Year
Estate plans are made based on current tax laws. There is no crystal ball to tell you what the tax law will be like next year, to say nothing of 10 or 20 years from now.
As just one example, the exclusion amount for the federal estate tax has changed from $675,000 in 2001 to $11.4 million in 2019. In 2010, there was no estate tax at all! Recent changes have mostly affected larger estates. Still, even for more modest estates, your trust funding plan might be far more conservative than necessary if it has not been revisited since 2001.
Portability laws have also changed, allowing unused exemption balances to be transferred to a surviving spouse. If you attempted to guard your estate from taxation with a credit shelter trust, this plan might no longer be appropriate.
Income tax rates have also increased relative to estate taxes. An estate plan that focused on estate tax consequences may be out of date. You could do better by emphasizing income tax strategy.
Consider meeting with your estate planning attorney at least once a year to make sure you have the best plan for the current tax policies.
Children Grow, Circumstances Change
You may set up your estate plan when your heirs are small children. Evolving circumstances in their lives might merit a different strategy.
A will or trust may specify a guardian for a minor beneficiary. When the beneficiary comes of age, a guardian may no longer be needed. The life circumstances of grown children may need to be taken into account. Is the beneficiary now married, perhaps with children, and financially responsible?
A trust set up for a minor child may stagger the disposition of assets. This ensures that the child is not burdened with an inheritance he or she is too inexperienced to manage. For example, one-third of assets may vest to the heir at the age of 25, another at 30, the rest at 35. The heir may reach the age of 30 or 35, but staggered vesting may still be the best option. Unless the estate plan is updated, the assets could fully vest upon your passing.
Maybe your child becomes married. Assets in your estate could easily become commingled with the assets of the spouse, putting them at risk in the event of a divorce. The happy couple may not want to consider this. It is your job to do so.
The Matching Game
Do not neglect the nuts and bolts. As life insurance policies, retirement accounts, and other products get added into the mix, beneficiaries and fiduciaries ought to match to prevent conflicting claims upon your passing. You should check in with your estate planning attorney regularly to make sure everything matches, so your heirs and beneficiaries do not end up in court after your passing.
We Are Here to Help You Today
You know you need a plan; you have stepped up and put a plan in place. Gift yourself peace of mind and keep the plan up-to-date. We are on your team to make the process as painless as possible. Contact Atlanta Wills + Trusts Law Group by Refeca Law, LLC and let us do the heavy lifting of a thorough estate plan review.