Does Your Estate Plan Need a Physical?

The best goal to set after completing your tax filing, is to make or review your estate plan, says The Pathway in the timely article “Giving your estate plans a check-up.” After all, there this is probably the time of year when you have the most current and complete look at your financial status. The next step is to give yourself the peace of mind, that comes from having a plan that cares for your family and any charities that are important to you.

If you are among those Americans who actually has an estate plan in place, consider this: when was the last time you reviewed or updated the plan? A person’s estate plan is a living document that needs attention on a regular basis, once it is done. Life changes, tax laws change and estate plans need to reflect those changes.

Here are some key reasons to update your estate plan:

People in your life. The relationships you have with the people named in your will, or in your trusts, or as your trustees, may have changed. There may have been happy changes, like birth and marriage, or sad changes, like divorce and death. You might not be close with your colleagues at work because of a job transfer, or your college friends have moved far away and would not be able to serve as your agents. Life changes, and so does your estate plan.

Assets undergo changes as well. If your estate has changed for better or worse since the last time your estate plan was executed, there may be provisions that no longer make sense. If life has been good to you, you may decide to expand an initial donation to a charity that would welcome your generous gift. If you’ve added life insurance coverage, you may want to change how other assets are distributed.

Locations change. Have you moved? If you have changed your state of residence, you must have your estate plan reviewed with an attorney as quickly as possible. Estate law is governed by each state, and what worked well in New Jersey, may not work in Arizona.

Changes in tax laws. After the latest large federal tax law, estate tax exemptions changed dramatically. Plans that you made prior to the tax change may no longer be necessary or may fail to accomplish your goals. There may be advantages that you are missing.

The passage of time. If it’s been more than three years since you’ve reviewed your estate plan and will, it’s time to do so. Locate your original will, review it with an attorney and see if any changes are needed. In a perfect world, you would do this every year after completing your taxes.

People who reach age 70½ years, are required by law to start taking Required Minimum Distributions (RMDs) from their IRAs, 401(k)s, SEPs or other qualified plans. As you review your estate plans and retirement accounts, this is a good time to also review your beneficiary designations.

The estate plan is your opportunity to protect your family and your assets. Don’t leave it to chance or neglect it. An estate plan should be reviewed and given a regular checkup, just like a person.

Reference: The Pathway (April 1, 2019) “Giving your estate plans a check-up”