Mid-Year Estate Plan Review

By on May 21, 2018
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It’s hard to believe we’re halfway through 2018 already. July will mark the mid-year point, which is the perfect time to review your estate plan, as the first half of the year can bring about many changes. Maybe you made financial adjustments to your investments during tax season, or maybe you had a child get married in June and they now have a different last name. Any financial or life change can impact important estate-planning documents. Here is your mid-year review checklist to ensure your plan is up to date.

Estate Plan Review Checklist

If you neglected your New Year’s resolution to review your estate plan, mid-year is the perfect time to ensure your affairs are in order. Ask yourself the following questions, and make an appointment with your attorney and/or trusted financial advisor if you answer yes to any of these situations.

Have you experienced any recent life changes?

Any changes in your own life or in the lives of your loved ones should be addressed in your estate-planning documents as soon as possible. If you or your beneficiaries have experienced any of the changes below, talk to your attorney about updating your plan.

  • Acquisition of new assets
  • Adoption / birth of a child
  • Death of a child / spouse
  • Divorce
  • Incapacitation of child / self / spouse
  • Marriage
  • Real estate acquisition
  • Relocation
  • Retirement

While you are making these updates, it’s a convenient time to ensure the proper individuals are named in your Advanced Healthcare Directives. Perhaps when the documents were prepared the person named as your healthcare proxy had a different name, lived in a different state, was not married, or has remarried or gotten divorced, or maybe they had different circumstances at that time. Any change may be a significant consideration in whether that person should continue to be your healthcare proxy and make decisions regarding your end-of-life care.

Have you experienced any financial changes?

Address any significant financial changes that impact decisions about your future or the amount of inheritance you leave your beneficiaries. Make adjustments to the appropriate documents if you have:

  • Changed insurance coverage
  • Changed jobs
  • Formed, purchased, or sold a business
  • Gifted money
  • Opened new bank or investment accounts
  • Paid off a mortgage
  • Received an inheritance
  • Received a pay raise
  • Won the lottery

Financial changes occur all the time and not all changes may seem significant, like opening a bank account. If you are unsure, consult with your financial advisor or attorney so you don’t end up with money out of your control.

Have there been changes in the law that affect your estate plan?

The answer to this is probably no. Sometimes there are changes in tax and estate planning laws at both the state and federal levels that will have significant impact on your estate plan.

Unless you are amongst the richest families in America, the federal estate tax will probably not affect you. You can give away up to $11.2 million dollars without owing any taxes, which means about 99.5% of all existing estates will not owe federal estate tax.

Gift taxes may apply to your situation, and this year you can gift up to $15,000 per person, to as many people as you want, without being taxed. You can also give money to charities, educational institutions, medical facilities, political organizations, or your spouse without being taxed.

Do you know which documents to update?

Do you have an inventory of your estate-planning documents? Do you know which documents you need to update when you experience a financial or life change? It’s important to keep tabs on prepared documents to ensure they are updated accordingly and kept current and valid. Here is a list of estate documents you should have in your estate plan already:

If you have some of these documents prepared, but not all, talk to your attorney, and ensure you have the necessary documents so that your estate plan will actually work when needed. Estate plans often fail due to inadequate documentation, inaccurately titled assets, and outdated beneficiary designations.

How often should I review my estate plan?

Unless your attorney has a formal estate plan update and maintenance program, you will have to remember to review your plan and update it when necessary. The best answer to “How often should I review my estate plan?” is whenever you or one of your beneficiaries experiences a significant financial or life change. Life changes most likely occur more often than federal/state estate tax law changes, but that’s also a good time to plan a review just in case the changes affect you.

In general, if you have a large estate, it is a good idea to review it on an annual basis in case of tax law changes. If your estate is small, tax law changes won’t affect you, and you can probably review your plan every five years, unless of course you experience life changes. Additionally, you should review your plan if it’s value has increased or decreased more than 20% over a two-year period.

Other Mid-Year Review Tasks

Since you are taking the time to review your estate plan, you may as well review your personal finances, including your credit report, and your tax situation, especially if you had any complications this past April. Both your financial and tax situations can impact your estate plan. If you make any adjustments, be sure those changes are reflected accurately in your estate planning documentation.

It’s easy to get caught up in the daily grind, and in the excitement of life changes happening to us or around us. However, it’s imperative that when the excitement dies down, or when you resolve the issues you may be dealing with, that you address any resulting changes in your estate plan. No one knows when they are going to need their plan. It’s in your best interest and in the best interest of your loved ones if you are proactive and always prepared.

Remember to speak with your financial, legal or tax professional for more information about the topics which interest you.

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About Harold Goldman

I am the founder of FinancialSafetyNet.org, and a Retirement Planning and Long-Term Care specialist. I am also the President of Emes Insurance Services, Inc., a Murrieta based insurance agency designed to help people with Retirement Planning and funding for College. I believe in educating my clients to become financially competent in an effort to develop plans for guaranteed income, protection against loss and tax-advantaged growth. To contact me Call (844)-376-2265

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