When to Revisit Your Estate Plan

People get inspired to sign a will when a major life event occurs. Sometimes it’s because they became a parent or they bought a house or a close friend or family member died and they handled a messy estate. Once a client decided to write his will after doing a 180 on the D.C. beltline. Whatever the inspiration may be, I am always glad when a client gets their plan in place. I send them off with the suggestion that they check in again in five years. Some people follow that suggestion. Most wait about ten years. I suspect that if I sat down with anyone after five years and reviewed their plan, changes would be needed. That’s just the nature of life.

The recent raising of the federal estate tax exemption amount is a good reason to review your estate plan. The coverage for estates is now $5,490,000, which is the amount that can pass free from federal estate tax. North Carolina has eliminated its estate tax. You may have a plan that included a trust for your spouse at the first death (often this meant that you split your assets roughly equally as part of the planning). If the value of your assets is below the exemption amount, you may not want to burden your spouse with a trust at your death. Things could be simplified and simple is usually better.

If the overall value of your estate has increased or decreased significantly, you may need to make changes. Most people don’t win the lottery but many people inherit or purchase assets and this can affect what provisions you need at death and during life to ensure that things will go smoothly. The purchase of real property in another state might cause an ancillary probate at your death, which can be avoided with the right plan.

If you marry, divorce, or remarry, you will need revised documents. You also should review your beneficiary designations on your assets such as retirement accounts, life insurance, and annuities, which are not revoked by divorce.

Having a child results in the need to cover guardianship in your will and setting up a trust for a minor. As children get older, your view on how long a trust for them should last may change as well as who should be the Trustee of the assets. If the guardians you chose when your children were young have divorced, are no longer in your life, or have moved away, you may need to pick new guardians.

If you move to a new state, you should execute a new health care power of attorney and living will for that state. We have fifty different versions of health care powers of attorney and living wills in this country because each state determines the law on those issues. Though your North Carolina documents are supposed to be recognized in other states, you want your health care provider to understand the document that they are reviewing in your chart.

A new state of residence also may have different tax laws from North Carolina. Your estate plan could need revision if, for example, the new state has a state estate tax or if you move from a community property state to a common law one, or vice versa. The laws governing the formalities required in a will also may differ in your new state, which means your will may need revisions.

Finally if one of your heirs dies or becomes incompetent, you may want to change your plan. Though the contingency of a beneficiary predeceasing you is usually covered in the will, when the situation has become reality, you may feel differently and want to alter the distribution. If a person is no longer able to manage their own money, you may need to establish a trust for them.

Change begets change. You cared enough to establish a plan for yourself if you become incompetent and for your family so that your estate will go smoothly. It is equally important to keep your plan up to date. There is no better time than now to pull out your documents and look them over.


Originally published in Southern Neighbor, June 2013


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