Legal Spring Cleaning: 5 Estate Planning Tips
Think spring cleaning means dustpans and storage boxes? Sure, we could all use a clean sweep and some serious decluttering after this long, captive winter. But why not take it a step further? Take some time this Spring to clean up your estate plan - if you have one - or start one if you don't. Everyone sleeps better at night when their legal house is in order.
Back to basics. Who needs a will? If you have children, positive net worth, and/or just want to leave clear instructions regarding your property and legacy -- and don't want to leave it to the state to decide who cares for your minor children or gets your stuff -- you need a will.
What about a trust? Wills and trusts are both part of a comprehensive estate plan and they do different things. Short answer - you should consider a trust if you have a taxable estate, own a home or other property (especially out of state), want to avoid probate and keep your estate private, have a child with special needs or a complex family situation, or want to possibly protect assets from creditors or others.
You've got that covered? Great! Don't stop there - life changes make it essential to review and update your plan periodically. An estate plan only works if it reflects your current life circumstances and your wishes.
Here are 5 tips to keep your estate plan fresh and up-to-date:
Review and update. Estate attorneys suggest reviewing your will every 3 to 5 years, or at any major life event such as marriage, divorce, birth of a child/grandchild or death of a family member. Take another look as well if there's been a material change in your/your spouse’s financial situation or change in federal or state tax laws.
Take a look at the people you've given important roles. You named an executor of your will, a legal guardian for your minor children (and/or pets), trustees for any trusts you might have, a power of attorney and healthcare representative. Awesome! Don't forget to periodically review these roles and the people you've named to fill them. Life evolves, people move, pass away, and relationships change. Make sure the people you've named are still able to serve ... and that each is still the right person for the job.
Review your beneficiaries. The people and organizations named as your beneficiaries (heirs) should be reviewed as well. Are there any new/additional beneficiaries you'd like to add, like a new grandchild or son or daughter-in-law? Is there anyone you'd like to remove because, for example, they've passed away or the relationship has changed? What about charitable causes? Are there any new causes or institutions you'd like to include?
Make sure your other account beneficiaries are still in line with your estate plan. Certain assets, like life insurance policies, IRAs, retirement and brokerage accounts, are payable on death (POD) and pass at death to the beneficiaries named on the accounts. These POD beneficiaries supersede the beneficiaries named in your will. (For example, if your ex-spouse was written out of your will but left as beneficiary of your retirement account, the account would pass to him/her regardless of what the will says.) So make sure all POD account beneficiaries are in line with your wishes.
If you create a new will (or trust), destroy the old one. This goes beyond just decluttering. Keeping old copies could cause confusion and make the probate process harder and longer. Shred and discard any outdated wills, trusts, powers of attorney or advance directives.
The estate plan that suits you best is one tailored to your personal situation and concerns, both of which may change and evolve over time. At the end of the day, remember that there's no one size fits all. Speak to an estate planning lawyer in your state about the right plan for you .... and keep it current.
Approach the new season with the confidence that comes from positive action. With Woman's Compass Forum, you get information you can use to be proactive in meaningful ways. Do something today your future self (and the people you love) will thank you for.
This blog is for educational purposes. It provides general information but does not provide legal advice or create an attorney-client relationship. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.