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Has Your Estate Plan Aged as Gracefully as You?
July 2013 (Revised December 2017)
If more than a few years have passed since you
created your will or trust, changes in circumstances might dictate a change in
See also: Maintaining a Healthy Estate Plan
In a perfect world, you could create an estate plan and be done
with it, putting it on the shelf and then waiting for it to do its thing. But,
alas, even in a perfect world, things would change – and it is that rascally
“change” that makes regular, periodic reviews of your will, trust and other
estate planning documents such a good idea.
You can wait for your estate planning attorney to call you for a
review, but the better approach is to schedule a meeting with yourself once
every two or three years to look over your documents and consider whether,
against the backdrop of a constantly changing world, everything looks as
ship-shape as when you set up your plan.
As you go through your review, be alert to the impact of
“triggering events” that might call for an estate plan update or makeover.
The Tax Laws Have Changed. Under the tax law
passed in December 2017, the estate tax exemption for 2018 is $11.2 million for
an individual and $22.4 million for a married couple. If the pages of your
will or trust are starting to fade, the exemption amount that was in effect
when you made your plan may differ sharply from the current level.
Your Ship Is Coming In. If you anticipate a big
investment pay-off, the purchase or sale of a business, a sharp increase in
business profits and/or value, a generous inheritance or winning the Powerball,
think about redirecting some of your impending fortune to kids, grandkids,
Your Ship Came In. Ditto if the value of your estate has
significantly increased since you created your plan.
Your Ship Sailed. If your estate plan was created in 2008
or before – i.e., prior to the Great Recession – the value and makeup of your
estate may look a lot different now than then. Even though things are looking
rosier now, you may still be able to take advantage of depressed asset values
and low (but climbing) interest rates in making lifetime transfers, whether
through gifts or intra-family transactions.
You’ve Become Self-Employed. If you have transitioned
from employment to business ownership, planning for succession, asset protection
and other objectives are important issues that didn’t exist then.
Your Marital Status Changed. Marriage, divorce,
separation or the death of a spouse has a huge impact on the effectiveness of
your will or living trust and on your wishes for how and to whom your assets are
to be distributed. Also affected are retirement assets, life insurance and
jointly titled bank accounts, brokerage accounts and real estate.
You’ve Become a Parent. For many people, this is the
first occasion for doing an estate plan. Most importantly, be sure you name a
guardian for your children and provide for them financially in case something
happens to you.
Your Child Has Become an Adult (at Least Chronologically).
You might have made planning decisions regarding your children, when they were
still in diapers, that warrant revisiting. Do they have opportunities,
limitations or needs now that you didn’t anticipate then?
Your Kids Have Become Parents. It has been said that
grandkids are God’s reward for not killing your children, and you may respond by
considering, for the first time, what “generation skipping” really means, and
planning initiatives such as trusts for your grandkids’ education, special
You’re Getting Older (Part 1). If you’re older now than
when you created your plan, preparing for long-term care, health challenges and
other costs of being human may be more of a priority.
You’re Getting Older (Part 2). Even if you’re fit as a fiddle
and plan to live forever, Uncle Sam is eyeing your retirement accounts. If
you’re approaching or at the point of taking required distributions from your
IRA, 401(k) or other qualified plan, that can affect your other planning.
An Heir or Beneficiary Has Passed Away. If someone you
named in your will or trust has died, you should check with your estate planning
attorney to ensure that your documents’ instructions adequately describe who
gets what in the absence of the deceased heir or beneficiary.
A Responsible Party Is No Longer a Good Candidate. A
change in the circumstances of a person you have named as a personal
representative, trustee, guardian, etc., is a common stimulus of amending your
planning documents. Perhaps they have passed away, become ill or infirm, or are
not the person you thought they were when you selected them.
You’ve Taken Up a Cause. You would like to provide for a
charity, religious organization or other worthy cause that wasn’t on your radar
screen when you set up your estate plan.
You Moved to Another State. The tax, trust, community
property and inheritance laws of your newly adopted state may be just different
enough from the laws of your former state to cause a problem with your will or
trust. Have an attorney in your new state give your estate plan a look-see.
If change in your situation causes you to question whether your
estate plan is as effective as you would like, call your estate planning
attorney and pose those specific questions. Your attorney should be able to
advise you as to whether a change is in order and how to best achieve any needed