The best goal to set after filing your tax returns is to make or review your estate plan, says The Pathway in the timely article “Giving your estate plans a check-up.” After all, this tends to be the time of year when you have the most current and complete look at your financial status. Taking that next step can give you the peace of mind that comes from having a plan that cares for your family and any charities that are important to you.
If you have an estate plan in place, when was the last time you reviewed it? A person’s estate plan isn’t a “once and done” thing. It needs attention on a regular basis; life changes and tax law changes should be considered when you review your estate plan.
Here are some key reasons to review your estate plan:
People in your life. The relationships you have with the people named in your Will or in your Trusts may have changed. There may have been happy changes, like birth and marriage, or sad changes, like divorce and death. You might not be close with your colleagues at work because of a job transfer, or your college friends have moved far away and would not be able to serve as your agents. Life changes, and so does your estate plan.
Assets undergo changes as well. If your estate has changed for better or worse since the last time your estate plan was executed, there may be provisions that no longer make sense. If life has been good to you, you may decide to expand an initial donation to a charity that would welcome your generous gift. If you’ve added life insurance coverage, you may want to change how other assets are distributed.
Locations change. Have you moved? If you’ve changed your state of residence, you should have your estate plan reviewed with an attorney as quickly as possible. Estate law is governed by each state, and what worked well in New Jersey may not work in Florida.
Changes in tax laws. After the latest large federal tax law was enacted, estate tax exemptions changed dramatically. Plans that you made prior to the tax change may no longer be necessary or may fail to accomplish your goals. There may be advantages that you are missing.
The passage of time. If it’s been more than three years since you’ve reviewed your estate plan and Will, it’s time to do so. Locate your original Will, review it with an attorney and see if any changes are needed. In a perfect world, you would do this every year after completing your taxes.
People who reach age 70½ years are required by law to start taking Required Minimum Distributions (RMDs) from their IRAs, 401(k)s, SEPs or other qualified plans. As you review your retirement accounts, you should also review your beneficiary designations.
The estate plan is your opportunity to protect your family and your assets. Don’t leave it to chance or neglect it. An estate plan should be reviewed and given a regular checkup, just like a person.
Reference: The Pathway (April 1, 2019) “Giving your estate plans a check-up”