An estate plan is unfortunately not evergreen. It is meant to last many seasons but its value may decrease over time. You should consider reviewing your estate plan about every 5 to 10 years, or upon a life event such as the below:
When the time comes to update the trust, there are two ways of making the updates. You can either amend the trust, or amend and restate the trust. In general, truly simple updates such as changing a successor trustee would only require an amendment. Amending a trust is a rather simple process.
On the contrary, when it comes to significant changes such as changing a beneficiary or making a lot of small changes, it is a best practice to amend and restate the trust. When you restate a trust, the name and date of the trust stay the same, but you will get an entirely new trust that is updated to both your wishes, and the current the law.
For instance, many older trusts, created before the age of the internet, social media, cell phones, and cloud accounts, do not contain any provisions which would empower the trustee to access these digital assets. Without this power, your loved ones may need a court order to access your digital assets such as iPhone photos, or even airline miles. Also, prior to the change in tax laws, many trusts were structured as AB trusts to save families from incurring estate tax. With the federal estate tax exemption so high at this point, these AB trust structures may not be worth the added work that administering that type of trust requires.
An added bonus to restating the trust is that nobody ever sees the old trust. So, if you make any change to your trust such as deleting a beneficiary, or decreasing a beneficiary’s share, which could result in hurt feelings, that beneficiary never has to know about that change.
Drop a line to discuss how I may help you with updating your estate plan.
What Is Typically Included In An Estate Plan (Part 2): Advance Health Care Directives & Property Management
Unfortunately, there are instances when people are simply unable to make decisions for themselves as a result of incapacity. This incapacity could be because of old age or a medical condition.
Advance Health Care Directive (also sometimes referred to as a “living will”) – This document allows you to designate a loved one to act on your behalf with regard to medical decisions. This document may also contain information regarding your end-of-life care.
You do not need an attorney to create an advance health care directive. There are many forms available. My preferred form is published by The Regents of the University of California, and can be found here: https://prepareforyourcare.org/advance-directive-state/ca.
There are a couple of other documents that are related to advanced health care directives such as a do-not-resuscitate form (“DNR”) and a Physician Orders for Life-Sustaining Treatment (“POLST”). A DNR informs medical providers that a patient does not wish to receive CPR if there is a medical emergency. A POLST, is an order which specifies specific medical wishes as to: 1) CPR; 2) use of a ventilator; or 3) artificial nutrition. In general, these documents are not typically recommended for young, healthy people.
Durable Power Of Attorney For Property Management/Finances – Similarly to the above, this document allows you to designate a loved one to act on your behalf with regard to management of your finances and property.
This document is useful even when a person is temporarily incapacitated such as in the event of a hospital stay. As your agent, your loved one will be empowered to write checks on your behalf, and manage your assets for you. Typically, your agent will be empowered to do things such as: filing and paying your taxes, transferring property into a trust, managing your investments, and filing legal actions on your behalf.
You can set forth your wishes as to when this power will take effect – either upon signing or upon an event springing the document into effect like incapacity. You can speak to your attorney about what is best for you.
Drop a line if you are interested in learning more about how I can assist you with this aspect of estate planning.
Your beneficiary designations are critical to a good estate plan. But, they are often overlooked! Combined with the right estate plan, these two factors can really organize your financial affairs.
Also, the good news is that you don’t even need an attorney to designate your beneficiaries or payable on death (“POD”) designations. All you need to do is contact your financial institutions so that your account will simply pass to your designated beneficiary or POD designation.
So, for instance let’s say you have been married for a while. But, maybe you haven’t had a chance to update the beneficiary on your life insurance. So, it still names your sister and brother as beneficiaries. Let’s also say you recently had a baby. And, maybe that life insurance beneficiary is still set to your brother and sister.
If you pass, your spouse and young child will not receive those benefits. They will pass directly to your sister and brother. Well, that’s probably not what you planned. That's probably not even what your sister or brother would want either.
Let’s say that instead, you list your beneficiaries like this:
This way, your life insurance proceeds will pass directly to your spouse. If s/he isn’t around, then it will go directly to your child. The last case scenario, passing those benefits to your trust, would apply if neither of those options are available.
Your trust is available to guide your loved ones as to your wishes. In this example, without this plan and a trust, your loved ones will not have any guidance, and may have to seek court guidance.
Court guidance = attorneys, attorney’s fees, paperwork and waiting. We want to avoid that. A trust will help you to avoid that.
This is just one example of how the right beneficiary designations and estate plan can work together to keep as much coin in the family bucket, so to speak.
Interested in seeing how an estate plan can help you or your family? Please contact me for a complimentary consultation to discuss your options.
From personal experience with Assisted Reproductive Technology ("ART”), I know that estate planning for frozen genetic material is a factor that is frequently not considered by many estate planners. Genetic material is absolutely priceless, and should be treated with a particular respect and sensitivity.
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