Has it been several years since you last reviewed your estate plan? Estate planning can be expensive and, for many, involves difficult conversations with family members and loved ones. As a result, estate plans are often set up and then left unrevised for long periods of time. However, there is a cost to “set and forget” estate planning. Major life changes may not be appropriately captured and considered which can lead to squandered fortunes, diminished financial legacies, and bitter disputes between heirs.
Your estate plan should reflect your intent to transfer family wealth and your final wishes. Accordingly, most estate plans have, at a minimum, a will, a financial power of attorney, and a health care power of attorney. The content of these documents should run parallel to your life circumstances and change from time to time. At the most basic level, these documents will ensure that your final wishes are followed and your valuables are allocated between your designated beneficiaries in your intended way.
As a result, your plans should be reviewed frequently and revised as necessary. For some, this may mean an annual or semi-annual review, while for others, this may mean a review every three years. The appropriate frequency of review is dependent on your personal situation but, should be done at frequent enough intervals to capture and plan for major life events and tax changes. Your tax or legal professionals can help you determine when a review of your plans are necessary.
Consideration is always warranted and revision may be necessary to your estate plans whenever the following occur:
- Change in the number of dependents
- Birth of a grandchild
- Change in your or your spouse’s financial goals
- Illness or disability of you or your spouse
- Purchase of a new home or other large asset
- Death of a family member
- Change in career
- Change in wealth or status
- Change in your wishes
- Change in marital status
- Receipt of a large inheritance
- Major change in tax law
Besides major life events, changing tax law can dramatically alter the way you plan your estate. Of particular relevance is President Trump’s proposed tax reform and its potential impact on the estate and gift tax. The realization of any such changes to the tax code would warrant a review of current estate plans and a conversation with your tax and legal professionals.
Proper estate planning will ensure that your surviving wealth and family members are properly taken care of at the lowest external cost. Please contact your L&B professional at 858-558-9200 with any questions regarding estate planning.