New Year’s Resolution – Review Your Estate Plan

With a new year comes resolutions. Some people may plan to get into better shape. Some people may plan to get out of credit card debt. But everyone should make a resolution to review their estate planning documents.

To help get you started, we put together a brief checklist of topics and issues you and your loved ones need to review in your estate plan. You should make this a yearly habit. That is why, at InSight Law, we have a formal maintenance plan for all of our clients to update their estate plans and make adjustments as events in our their lives progress and changes occur in the law.

Let’s begin…

  1. Review your Will and/or Trust

You need to make sure you are comfortable with the Personal Representative (a.k.a. Executor) and Trustee designations in your Will and/or Trust instrument. The individual(s) selected need to be dependable and trustworthy. Remember, you also have the right to designate a co- Trustee or co-representative, if you are not comfortable designating one individual.

With trust based planning, having two people assigned to that role can be helpful in a disability situation and help provide more asset protection for your beneficiaries. For example, if you become disabled and your spouse is spending time taking care of you, then you might want to name a co-trustee to help your spouse manage your assets. Also, having an independent co-trustee named to manage a trust share provides asset protection in case of creditors, bad divorces, or catastrophic events.

In addition to reviewing your Personal Representative and Trustee designations, review who you name as beneficiaries and make updates as necessary. The same goes for gifts of specific property such as heirlooms, vehicles, and so forth.

Finally, make sure you are up to date on any major changes in the law they may affect your planning. For example, not too long ago, the federal estate tax exemption was at $1 million and many plans were based around these laws. This value has increased to over $5 million for an individual, and there are now newer strategies that focus on other areas of tax planning.

  1. Review your Financial Power of Attorney.

When you give someone Power of Attorney, it enables them to make important legal decisions on your behalf. In the same vein, you can designate someone to have “financial” Power of Attorney and act on your behalf on important financial and business matters such as handling bank accounts, retirement accounts, and so forth. You should also be clear about whether your financial power of attorney is “presently exercisable” or is exercisable only in the event you become incapacitated.  You should also feel comfortable with the people you have named since they can have a lot of power with these documents.

  1. Review your Health Care Power of Attorney/Advance Medical Directive

In addition to designating someone with financial Power of Attorney, you can designate someone with your health care Power of Attorney or Advance Medical Directive. Such a document appoints an individual, or individuals, to make health care decisions on your behalf if you are unable. Be sure your healthcare agent knows your wishes, and make sure they are someone who is capable of handling such a tremendous responsibility. For example, if the person you designated recently moved across the country, or is now an ex-spouse, you should re-consider the designation.

Additionally, make sure your directives state your wishes for end-of-life care. This includes your preferences if you have a terminal condition or wind up in a persistent vegetative state.

  1. Review Your Insurance and Retirement Plans To Ensure the Proper 

Beneficiaries are Listed.

It happens quite often – someone passes away and their ex-spouse or an estranged child suddenly receives the decedent’s pension benefits or life insurance money. This can be quite frustrating for whomever the decedent was close to and/or currently married to when they passed away. Do not let this happen to you. Reviewing your insurance and retirement plans are just as important as reviewing your Will, Trust, and other documents. The last thing you want to do is make the necessary changes to your Will to remove an ex-spouse or disinherit a child but inadvertently leave them as beneficiaries of your life insurance policy (which could prove to be a windfall). The U.S. Supreme Court addressed this very issue in Hillman v. Maretta, 133 S. Ct. 1943 (2013), where an ex-wife was left as the designated beneficiary of a decedent’s life insurance policy. The widow of the decedent challenged the ex-wife receiving that money. Guess what – the Court found in favor of the ex-wife. Again, do not let this happen to you.

If you would like your estate plan reviewed by a professional, please contact us to get started.