Every estate planning attorney will tell you that they meet with people every day, who sheepishly admit that they have been meaning to review their estate plan, but just have not gotten to it. Let the guilt go.
Attorneys know that no one wants to talk about death, taxes or illness, says Wicked Local in the article “Five Reasons to Review Your Estate Plan.” However, there are five times when even an appearance before the Queen of England has to come second to reviewing your estate plan.
You have minor children. An estate plan for a couple with young children must do two very important things: address the care and custody of minor children should both parents die and address the management and distribution of the assets that the children will inherit. The will or Trust are the estate planning documents used to name a guardian for minor children. The guardian is the person who will determine where your children will live and go to school, what kind of health care they receive and make all daily decisions about their care and upbringing. One benefit of a trust over a will is the delay between death and the legal status of the document. A will has to go through the court system and be approved by a judge, where a trust doesn’t. When a person dies with a will, there can be a 30, 60, 90, 120+ day delay between death and the time the will is presented to the court for approval. What can happen with the children during this lag-time is very troublesome, especially if Child Protective Services gets involved.
If you don’t have a will or trust, the court will name a guardian. You may not like the court’s decision. Your children might not like it at all. Having a will (but preferably a trust) takes care of this important decision.
Your estate is worth more than $1 million. While the federal estate plan exemptions currently are at levels that remove federal tax from most people’s estate planning concerns, there are still state estate taxes. Although Texas does not, some states have inheritance taxes. Whether you are married or single, if your assets are significant, you need an estate plan that maps out how assets will be left to your heirs and to plan for taxes.
Your last estate plan was created before 2012. There have been numerous changes in laws regarding wills, probate and trusts in Texas. This is not the only state that has seen major changes. There have been big changes in federal tax laws also. Strategies that were perfect in the past, may no longer be necessary or as productive because of these changes. While you are making these changes, do not forget to deal with digital assets. That includes email accounts, social media, online banking, etc. This will protect your fiduciaries from breaking federal hacking laws that are meant to protect online accounts, even when the person has your username and password.
You have robust retirement plans. Your will and trust do not control all the assets you own at the time of death. When it comes to retirement money (401k, IRA, etc) the first and foremost controlling element in your asset distribution is the beneficiary designation. Life insurance policies, annuities, and retirement accounts will be paid to the beneficiary named on the account, regardless of what your will says. Part of a comprehensive will review is to review beneficiary designations on each account. If you set up a trust, the trust can be the beneficiary of these accounts so that your personal instructions outlined in the the trust will dictate the distribution of these assets.
You are worried about long-term care costs. Estate planning does not take place in a vacuum. Your estate plan needs to address issues like your plan, if you or your spouse need care. Do you intend to stay in your home? Are you going to move to live closer to your children, or to a Continuing Care Retirement Community? Do you have long-term insurance in place? Do you want to plan for Medicaid eligibility?
All of these issues need to be considered when reviewing and updating your estate plan. If you have never had an estate plan created, this is the time. As you can see above, you need more than an “estate” plan, you really need to put together a total Family Protection Plan. Put your mind at ease, by getting this off your “to do” list and contact an experienced estate planning attorney.
Reference: Wicked Local (Aug. 29, 2019) “Five Reasons to Review Your Estate Plan”