Perhaps you have estate planning documents tucked away in a safe deposit box or in a secure location in your home. Just having these documents won’t serve you or your loved ones if the documents are out of date.
How has your family situation changed since you had these documents prepared? Marriage, divorce, birth and death impact all of us at one time or another. Financial situations change. Do you even remember who you named to receive your assets or to make decisions for you in the event of a disability?
If it has been more than five years since you last reviewed these documents – or if there have been changes in your life (and likely there have) – a review is warranted. At the very least, this review helps protect your loved ones from unintended consequences caused by outdated documents that no longer reflect your current family situation, financial circumstances or wishes for how your assets should be distributed.
Review all the documents that will distribute assets from your estate
While your will or trust may form the core of your estate plan, some of your most substantial assets might not be governed by those documents. Retirement accounts like IRAs and employer-sponsored plans, for example, are distributed according to the beneficiary forms you completed – not your will. The same goes for life insurance policies.
That’s why, as part of your estate plan review, you should also revisit any accounts with separate beneficiary designations. The good news? Updating these forms is often quick and easy – and in many cases, it can be done online.
Reviewing your will or trust
There are several aspects of your will or trust that require your scrutiny when doing your review.
Family situations. Marriage, divorce, birth or death can require a substantial change to an estate plan. Family members who should be included aren’t, and others who are in the estate plan perhaps should no longer be.- Financial situation. A change in your financial situation – or how your assets are held or titled – can upend your entire estate plan. For example, if you’ve designated specific assets for certain family members but no longer own those items, your plan is likely outdated. Perhaps you intended to leave a house to one person but have since sold it. Or maybe you’ve bought, sold or promised a piece of artwork, jewelry or another sentimental item to a loved one. If so, your will should be updated to reflect those changes.
- State of residence. The state of your residence controls the legal requirements for estate planning documents. If you have moved to another state since your current set of documents were written, a review by a local attorney will ensure that your documents comply with the laws of your newly adopted state.
- Health issues. Health issues of loved ones may determine if you need to revise an estate plan. Addictions, mental disabilities or the onset of dementia may necessitate that a trust be established so that the assets received are prudently managed and not subject to fraudulent conduct. If a family member has gone on Medicaid, a special needs trust may be appropriate so that federal or state benefits are not jeopardized.
- Tax laws. Any review of estate planning documents should include how the plan addresses current estate tax laws. If you are including charitable gifts as part of your plan, there are certain assets that – like retirement accounts – that, if left to a qualified charitable organization like the MUSC Foundation, may reduce the overall tax burden on your estate.
Reviewing other documents that should be part of an estate plan
A comprehensive review of an estate plan will include documents that appoint an individual to handle your financial affairs if you are unable (a financial power of attorney) and an individual to make medical decisions should you be unable (a medical power of attorney). Often the person appointed is a spouse or child. However, spouses pass away and children move away, necessitating a reevaluation of who is best to serve in these positions.
It likely will be easier than you think
If you’ve procrastinated in reviewing your estate planning documents, forgive yourself. It is not something that most individuals want to do. Once your review is complete, consult with an attorney to update your documents. If you’re considering a charitable gift in your plan, the MUSC Foundation’s Office of Planned Giving can provide guidance on how to align your legacy with your values.
