By: The American Academy of Estate Planning Attorneys
The holiday whirlwind is over, you’ve packed up the decorations, and life is settling into its familiar routine. Your thoughts are likely turning to the coming year, and the things you’d like to accomplish over the next twelve months.
Maybe you have ten pounds to lose. Perhaps you want to learn a new language, or set aside more time for family and friends. No matter what your resolutions are this New Year, there’s one item that you should add to your list: take a fresh look at your estate plan.
If you’re one of the 55% of Americans who do not have an estate plan, creating one might be the easiest of your resolutions. The first step is to meet with an experienced estate planning attorney.
The consultation is easy. You’ll sit down and chat with your attorney so that he or she can get a clear picture of your family and your goals. Then, your attorney will recommend a course of action and prepare an estate plan that meets your needs. The plan will likely include these basic documents:
- Living Trust. This will be the core of your estate plan. Transferring the appropriate assets into your living trust allows you to accomplish a number of goals. You’ll remain in control of your assets during your lifetime, and your trust will contain a plan for the management of your assets in case you become incapacitated. At your death, the assets in your trust will be transferred to your chosen beneficiaries – without the need for probate.
- Last Will and Testament. Your Will ensures that any assets accidentally left out of your trust will be transferred to your trust and distributed according to your wishes. If you have young children, your Will also allows you to designate a guardian for them in case you pass away before they become adults.
- Financial Power of Attorney. This tool allows you to appoint an agent – usually your spouse, one of your children, or a trusted friend – to manage your finances in case you are incapacitated.
- Health Care Power of Attorney. This tool allows you to appoint an agent to make medical decisions, including end of life decisions, if you are unable to make them yourself.
Depending on your circumstances, your estate planning attorney may recommend additional strategies to ensure that your planning goals are fulfilled and your family is protected in the event of your death or disability.
What if you already have an estate plan? The New Year is a great time to take a fresh look at your plan. You may find that it needs to be fine-tuned to keep up with changes in your family’s circumstances or changes in the law. While we recommend that everyone periodically meet with their estate planning attorney to review their estate plan, several situations strongly indicate that a review is in order.
If you have recently gotten married or divorced, you will want to ensure your assets go to the intended recipients and that the appropriate people are in charge of making decisions on your behalf.
Your estate planning attorney can help you review your family’s changed circumstances and understand how these circumstances affect your estate plan.
You might not realize it, but changes in your financial status can have a significant impact on your estate plan, as can changes in your children’s finances.
For example, if your overall net worth has increased – or if you have increased your life insurance coverage – you may need to think about estate tax planning. Your estate planning attorney can show you strategies for reducing your potential tax liability.
If one of your children has experienced a rise or fall in net worth, you may want to take a second look at the proportion of your estate each of your children will inherit. For example, if your son is single and has a secure job with a high salary, he may need less from you than his sister who has three children and a modest income.
New Planning Options
The law is always changing, and these changes can have an impact on your estate plan. If your plan is more than a few years old, it is likely that new planning options are available to better protect your assets, reduce your tax bill, and ensure the security of your family after you are gone. The best way to find out about new strategies is to sit down with your estate planning attorney and review your existing plan.
An up-to-date estate plan ensures that you have the best source of protection during your lifetime, and that your loved ones will be protected and provided for after you’re gone. Whether you are exploring the idea of estate planning for the first time or you’ve had a plan in place for years, now is the time to meet with a qualified estate planning attorney.