Estate planning is essential to ensure a smooth transition after you pass. Estate planning is a dynamic process that evolves throughout one’s life and changes as your needs and wishes change. It’s a good idea to update your estate plan every few years, especially if you’ve experienced any significant life changes, such as marriage, divorce, or a move. Reviewing your estate plans is a relatively straight-forward process.
Here are a few things to keep in mind when reviewing your estate plan:
- Law Changes
Estate laws change at both the state and federal level. There can be updates to exemption limits, gift taxes, or IRA rules. For example, the SECURE Act, passed by Congress in 2019, changed how IRA beneficiaries can distribute funds, eliminating the Stretch IRA and requiring full distribution within 10 years.
- Changes in Residency
Estate law varies state by state. If you’ve moved to a new state since last updating your estate plan, there could be new rules on trusts, executors, and powers of attorney. It’s a good idea to review your estate plan and update based on a new jurisdiction. Additionally, a move typically means the purchase/sale of major assets, which could affect the structure of your estate plan. Updating the assets in your estate plan ensures a stress-free process for your loved ones.
- General Power of Attorney
A general power of attorney is a person authorized to act on your behalf in legal, financial, or other personal decisions should you become incapacitated. It’s important to ensure this designation is up to date and accurate. Review your appointed agents and confirm your successor agents as well. If you need to revoke a general power of attorney.
- Health Care Power of Attorney
Health is always changing and your needs or wishes in this area may have changed. Review and update your health care power of attorney if the designated agent needs changing or your end-of-life treatment decisions have evolved. Have a conversation with your Health Care Power of Attorney about your wishes and the provisions you’ve placed in your estate plans.
- Last Will and Testament
The last will and testament is one of the most important pieces of your estate plan. We often acquire or sell assets throughout our lifetimes, so occasional updates are necessary to maintain this portion of the estate plan. Review the details of your will, including the beneficiaries and allocations, the tax implications, and the plan for any unique assets, such as jewelry, furniture, or collectibles. If you have minor children, confirm the named guardians are up to date.
- Trusts
If you have a revocable trust, review trustee and successor appointments. Most people will not encounter estate tax issues based on current federal exemption amounts, but review state inheritance tax levels, which affect individuals at lower net worth levels. If you have an irrevocable trust, confirm with trustees their duties of administration, management, and annual tax returns.
Establishing the proper estate plan is largely dependent individual circumstances and preferences. If you have questions about your existing estate plan, or are considering updating your estate plan, or want to establish your estate plan, please contact the attorneys at Rock Fusco & Connelly, LLC.