Preparing for a new year: Take time now for a quick estate plan review

Adler Pollock & Sheehan P.C.
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Adler Pollock & Sheehan P.C.

Hopefully, you’ve already made certain estate planning provisions this year to protect the interests of your heirs and minimize potential estate tax liability. But that doesn’t mean you’re completely in the clear. You can’t just fill out the paperwork, lock up the documents in a file cabinet or store them electronically, and forget about it. Consider your estate plan to be a “work in progress.”

Reflect life-changing events

Notably, your circumstances could be affected by certain life events that should be reflected in your estate plan. And the plan should be reviewed periodically anyway to ensure that it still meets your main objectives and is up to date. Although you can examine the plan whenever you choose, the end of the year and the start of a new year is often an opportune time for individuals to take stock of their situations.

What sort of life events might require you to update or modify estate planning documents? The following list isn’t all-inclusive by any means, but it can give you a good idea of when changes may be required:

  • Your marriage, divorce or remarriage,
  • The birth or adoption of a child, grandchild or great-grandchild,   
  • The death of a spouse or another family member,
  • The illness or disability of you, your spouse or another family member,
  • When a child or grandchild reaches the age of majority,
  • When a child or grandchild has education funding needs,
  • The death of the person named as guardian for minor children in your will, your personal representative or trustee of trust,
  •   Changes in long-term care insurance coverage,
  •   Taking out a large loan or incurring other debt,
  •   Sizable changes in the value of assets you own,
  •   Sale or purchase of a principal residence or second home,
  •   Significant promotion at work or change in job circumstances,
  •   Your retirement or retirement of your spouse.
  •   Receipt of a large gift or inheritance,
  •   Sale of a business interest, or
  •   Changes in federal or state income tax or estate tax laws.

As part of your estate plan review, examine the critical components — including the key legal documents incorporated within the plan. A quick perusal might take only 15 minutes or even less.

If you have any minor children, your will should designate a guardian to care for them should you die prematurely, as well as make certain other provisions, such as creating trusts to benefit your children until they reach the age of majority, or perhaps even longer.

Your durable power of attorney authorizes someone to handle your financial affairs decisions if you’re disabled or otherwise unable to act. Likewise, a medical durable power of attorney authorizes someone to handle your medical decision making if you’re disabled or unable to act. Typically, these powers of attorney are coordinated with a living will and other health care directives. The powers of attorney expire upon your death. A living will spells out your wishes concerning life-sustaining measures in the event of a terminal illness. It says what means should be used, withheld or withdrawn.

Although a letter of instruction isn’t legally binding, it can be incredibly useful. The letter may provide an inventory and location of assets; account numbers for securities, retirement plans and IRAs and insurance policies; and a list of professional contacts that can help your heirs after your death. It may also be used to state personal preferences (for example, specifics for funeral arrangements).

Prepare for a new year

Don’t put off your estate plan review any longer. Identify the items that should be changed and arrange to have the necessary adjustments made when 2017 arrives. Your estate planning advisor can help.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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