Is It Time to Update Your Plan?

The new year is a great time to review and update your estate plan. After thinking about investment performance from the past year and preparing for filing taxes, most of the information you need is fresh and preparation to meet with an estate planning lawyer is easier.

We recommend that our clients review their estate plan whenever a significant life event happens – births, deaths, marriages, divorces – and in any event at least every five years. Here are five more common situations that warrant revisiting your plan:

1. Your plan was drafted before 2012. Many plans drafted before 2012 used “A-B” or “marital and credit shelter (or bypass)” structures that divide the estate based on the estate tax exemption. Changes to the estate tax exemption and related rules mean many of those structures no longer work as intended or are less tax efficient. Especially if you had a revocable trust prepared before 2012, it is time to review and update your plan.
2. Your children are adults. Once your children reach age 18 those guardianship provisions in your will are no longer necessary. More importantly, you no longer have authority to make medical decisions for them or deal with their property. If you have young adult children you should consider having a durable power of attorney and a designation of healthcare surrogate prepared so that you can step in and make decisions if needed.
3. Your beneficiary designations haven’t been checked. A lot of good planning goes wrong due to missing or incorrect beneficiary designations. Many people with retirement accounts payable to trusts have not properly set the beneficiary designations to stretch the benefit payout. Many others may find their plan can be simplified or refined with better use of beneficiary designations. If you have not recently checked the beneficiary designations on your assets, you should do so as part of your plan review.
4. You bought a vacation home. Many people do not realize that a separate, out-of-state probate is required if they die owning real estate in another state. This is easily avoided with proper planning. If you bought a vacation home or investment property out-of-state since your plan was prepared, it is time to update your plan.
5. You got divorced. Florida law will automatically cause your ex-spouse to be treated as dying before you for purposes of your existing estate planning documents and certain beneficiary designations (including those on life insurance and retirement accounts). Except, based on a recent case, if you included your ex before you were married. There is no reason to leave any questions after a divorce; you should update your plan promptly.

For a few starting points to consider when reviewing your plan, try these prior posts: Who Needs a Will and Who Needs a Trust. Or, simply reach out to us.