With changing tax laws, regulations and life circumstances, your estate plan can easily outdate itself. As such, estate plans should be viewed as fluid documents, rather than an unchanging concrete plan.
While a thorough assessment of an estate plan is encouraged yearly, these eight items should be kept top of mind when considering if it’s time for a refresh.
Have Tax Laws Changed?
In 2001, Congress passed sweeping tax legislation that began the process to dramatically shift the landscape of estate planning. Unfortunately, many people still have estate plans that were created before these changes were enacted. The result? Higher exemption amounts may unintentionally affect married couples relying on traditional marital-non-marital trusts.
Have Marital Laws Been Updated?
In 2013, a court case opened the door for Federal recognition of same-sex marriage. In 2015, the recognition of same-sex marriage became mandatory across all 50 states offering new planning opportunities for these couples.
Is the Family Dynamic Different?
Much can happen over time in a person’s life. Marriage, divorce, new kids, loved ones passing away or becoming responsible for an individual with special needs. Any change in circumstance is an ideal opportunity to revisit an estate plan—especially when a person needs to be removed from a plan because of either death or divorce.
Has There Been a Move?
Moving can impact tax rates, tax types, probate laws and potentially available trust laws. In addition, some states are Community Property states, while others are not. The expansion of decanting—amending an irrevocable trust by pouring it into a new trust document—has allowed for a revisitation on some of these issues, even in irrevocable trusts set up in years past.
Are Beneficiary Designations Balanced?
Beneficiary designations are typically used to make certain probate assets non-probate. They must be reviewed periodically to make sure they are in harmony with the overall estate plan. In addition, while state law may correct an estate plan in the event of divorce or marriage, it might not update, for example, an Individual Retirement Account (IRAs) beneficiary designation.
Is the Financial Picture Current?
An individual’s portfolio makeup is dynamic and changes over time. The addition of real estate or a business to a portfolio, for example, means making certain a trustee, durable power of attorney or a personal representative knows and is empowered to carry out wishes regarding succession or sale.
Have Charitable Intentions Changed?
Is there desire to add a charitable gift or a new cause to the plan? Have already noted charities changed identity or split up? Are charitable beneficiaries properly identified? Now is the time to make those designations to ensure wishes are fulfilled.
Has Due Diligence Been Done?
Review estate plans to make sure it meets current wishes, is properly funded, unique assets have been property titled, and any necessary changes have been made.
Reviewing an estate plan may seem like a daunting task, but it’s one that is necessary to ensure the plan is used to its greatest potential. With the partnership of your trusted team of legal, tax and financial advisors, an updated estate plan is the best way to ensure wishes are clearly stated and carried out when needed.
Susan Teson is senior vice president, senior legal counsel at UMB Bank Private Wealth Management. She manages Private Wealth Management’s legal, real estate and unique assets administration and fiduciary tax teams.