As a premium estate planning firm, we rely on our own 24-point analysis while examining someone's existing estate planning documents and overall plan. Although most will wait until their own preferences change before they seek professional advice, it is important (and very beneficial) to realize that there are many elements involved in properly maintaining one's own estate plan, and regardless of whether one is able to identify their own preferred changes or updates, these items should be reviewed often with an attorney.
2. Quality Control - A second set of eyes can only help and clarify matters. Your existing plan may have very well been drafted with quite a bit of care, but there is always the possibility of an oversight, mistake, misinterpretation, omission, or misunderstanding. These inconsistencies not only happen in the drafting of the documents, but also in the communication with the attorney. We review your plan to ascertain whether your attorney understood your wishes, and if such is adequately reflected in your final plan.
3. Trustees and Other Fiduciaries - We discuss your trustees, agents, and other fiduciaries and review what these individuals are responsible for. We discuss whether, in our professional opinion, the circumstances surrounding these individuals allow them to act within their designated roles. Further, we discuss, given the totality of the circumstances, whether you still prefer the designated individuals to act in these roles.
4. Trustee Authority - A vast majority of estate plans significantly lack in the granting of the necessary authorities to the successor trustees. The economy and the way of doing business and interacting with financial institutions and other third parties has changed drastically over the past few years. If you were to become unexpectedly incapacitated within the next year or so, we seek to determine whether your trustee has the power and authority to not only buy and sell investments and open and close bank accounts, but also to handle all of the other potentially complex issues that may arise. We have come across many situations where successor trustees are unable to adequately handle the affairs of the trust creator due to ambiguous or inadequate language specifying the necessary authority.
5. Trustee Role and Responsibility - Another vital area where many trusts are inadequate is in the legal specification of some of the responsibilities of the successor trustees. Acting trustees tend to focus on what they are required to do. The problem is many trusts fail to specify such. Although the successor trustee is under certain legal obligations, there are other practices which would be very beneficial for a trustee to be aware of. What sort of records need to be kept, and with whom the information is shared, along with the various reporting requirements of the trustee should all be clearly specified in one's trust. We review your trust to ensure such requirements are adequately explained.
6. Beneficiary Designations - Are your listed beneficiaries the same beneficiaries you would currently like to receive distribution of your estate? Have there been changes in their circumstances or your relationship with them that would cause you to consider adjustments? Are there specific gifts that are no longer needed? Have any of your beneficiaries become incapacitated or deceased? Are the alternate beneficiaries listed still up to date? Who your beneficiaries are is a very important element of your estate plan, and should be reviewed and discussed with an attorney.
7. Distribution Strategies - Beyond the scope of this list is an entire world of strategy relating to how one's estate can be distributed. Whether the distributions are made outright to your beneficiaries or structured over time, the exact manner should be reviewed and determined if still relevant. Furthermore, are certain contingencies provided for such as distributions for medical and similar emergencies prior to normal distributions? Getting to know your beneficiaries and their current circumstances allows us to dictate whether further discussion is needed.
8. A/B Provision - An extremely popular strategy to implement into trust creation, which has since become quite outdated, is the A/B Trust. An A/B Trust requires that a significant amount of trust administration and accounting occur after the death of the first spouse. This is a legal requirement which, if ignored, could result in significant legal liability exposure for the surviving spouse. The driving purpose behind A/B Trusts is to minimize or completely eliminate Estate Tax exposure. Given the recent significant changes in the Estate Tax, such drastic measures are hardly ever needed. Furthermore, given recent case law, and the emergence of a "discretionary" A/B Trust, the traditional A/B Trust is all but obsolete, and if ignored, could also result in thousands of dollars of unnecessary expenses for the surviving spouse. It should be noted that A/B Trusts still play an important role in some specific situations, such as in blended families with beneficiaries that need protection. Whether you have an A/B Trust, and the feasibility of altering such provisions or re-creating the trust are always discussed.
9. Portability - Recent changes in the law allow spouses to take full advantage of each other's tax exclusions, which was only previously available through relatively complex trusts which require a significant amount of administration and expense to maintain. In reviewing your trust, we analyze how that new portability laws affect the structure of your trust and overall plan.
10. Other Estate Tax Issues - Although the Estate Tax exclusion is much higher than it has been in the past (thus dramatically decreasing the number of people affected by the tax), it is absolutely imperative that a thorough analysis is conducted to ensure that no unnecessary taxes are paid by one's estate. Many strategies exist to address a potential Estate Tax problem, and certain care should also be given to the make-up of your assets to ensure the Estate Tax does not become a future problem.
11. Updated Health Care Directives - This portion of one's estate plan is based off of laws that change more often and more dramatically than any other laws. Older health care directives have a seven-year expiration, while more recent directives may be not be subject to a relatively recent major overhaul in applicable legislation. While most of these changes should only result in certain provisions being outdated, in some situations the entire directive could be obsolete.
12. HIPAA Authorization - Recent federal laws relating to health insurance and medical care focus on patient privacy, and adequate measures need to be implemented to ensure that your agents have the necessary access to your medical records upon your incapacity. Most pressing is your agent's ability to adequately show financial institutions and other third parties that you are incapacitated thus necessitating (and allowing) your agent's action. Also important is the ability of the individual charged with making medical decisions on your behalf to access all of the information necessary to make informed decisions. Most estate plans do not have a HIPAA Authorization, and such should certainly be addressed.
13. Marital / Joint Ownership Property Agreements - Whenever a marital or joint-ownership relationship is involved in one's estate, adequate agreements need to be in place. This is the one element to a complete estate plan that we see missing the most. How are assets treated if they are the separate property of one spouse? What about assets that are community property of both spouses, but are normally accessed and managed by only one spouse? What if a client owns property jointly with a third party? All of these issues need to be reviewed to determine whether additional clarification is needed.
14. Other Corollary Documents - A well-rounded estate plan will have a set of various corollary documents and tools that serve to support the primary, main documents. Depending on the individual circumstances, some of these documents could be absolutely essential and integral to an overall plan. For example, the existence of a pre-nuptial agreement, prior marital relationships, and other legal obligations require additional clarification to ensure there are no problems with the administration of your trust, powers of attorney, or other core documents.
15. Basic Funding - A trust is only as effective as it is properly funded. Everything from your art, clothes, jewelry, and furniture to your bank accounts, investments, business interests, and real estate all need to be properly transferred into your trust, or otherwise properly accounted for. We review all your assets and review the funding status of each to ensure your trust will avoid probate and will function as anticipated.
16. Qualified Retirement Account Funding - Qualified retirement accounts, particularly IRAs have very unique estate planning implications. There is conflicting advice circulating regarding whether one should name their trust as the beneficiary of their qualified retirement accounts or whether individual beneficiaries should be named directly on the account. This decision carries with it asset protection ramifications, significant tax disparity, and drastically different distributions. All of these issues need to be discussed to ensure the best possible overall situation given your retirement assets and your specific goals.
17. Ukkestad Funding Document - A very recent California case has allowed any trust creator to integrate a "catch-all" funding document which, although not a replacement for adequate funding, can prevent any estate from having to go through probate, even if there is a catastrophic flaw with the underlying trust. The Ukkestad case is the most recent "game changer" in trust law, and the resulting advantages should be properly integrated into any estate plan.
18. Real Estate Titling / Title Integrity - For many, it is common knowledge that all real estate needs to be titled in the name of the trust. However, in practice it is extremely common to encounter problems in this area. Nearly every time a piece of property is re-financed, the title is transferred out of the trust and rarely transferred back in. Furthermore, a title issue prior to transferring the property into the trust could compromise the ability of the trust to avoid probate. We do a thorough review of the chain of title to all your real estate to ensure proper funding.
19. Property Taxes - Taxes associated with real estate are much more complex than most realize. Sure it is common to understand your basic rights (e.g., parent-child reassessment exclusion), but such tax exclusions are very technical in nature and a single word improperly used in your plan could result in tens of thousands of dollars of unnecessary taxes or fees that could easily be avoided. Unfortunately we see problems in this area quite a bit, and we review and discuss if any minor adjustments could prevent this from happening to you.
20. Life Insurance and Non-Trust Planning - A trust is a very powerful document, and has many advantages when heavily relied upon. However, there are circumstances, both legal and of personal preference, which require the trust to work in accordance with other estate planning vehicles such as life insurance, other trusts, partnership agreements, charitable foundations, etc. We discuss each of those items and review how they interface with your plan to ensure that the overall plan is working properly.
21. Preliminary Trust Administration Tasks - A well-drafted estate plan should withstand the test of time, and be able to function properly at any time as well as it did on the day it was created. There are certain circumstance (not very common) that would necessitate an additional document or two to be signed or an affidavit declared to, in order to ensure proper continuity of the trust. If there has been a death of a successor trustee, one of the creators of the trust, or if a beneficiary has passed away, there may need to be some slight adjustments, and we can discuss those with you.
22. Changed Circumstances of all Parties - After discussing the specific issues of the various elements of your estate plan, we will have a general discussion of the circumstances of all the parties involved. Have there been any marriages or divorces? Deaths? Births? Graduations? Has anyone moved? Retired? Begun a new career? Although it may not seem like many of these have effects on your estate plan, they most certainly do. We will have this discussion with you and note any concerns that we see as a potential point of further discussion.
23. Improved Language and Technique - Although the basic laws affecting most estate plans are relatively stable over time, there is a constant flow of local and national cases which affect how we strategize, advise, and draft planning documents. Even well-structured documents can be improved over time, and we will discuss these changes in detail with you. The analogy I use most often is that of a classic car: one can look at a beautifully restored classic car and appreciate its aesthetics and quality, but it should also be considered that safety features such as seat belts, air bags, and anti-lock brakes have dramatically improved the functionality of cars since then.
24. Overall Estate Plan Understanding - Last, we make sure every client we meet with has the knowledge and resources to understand and become familiar with exactly how their estate plan functions. We spend quite a bit of time explaining and educating you in the clear and concise manner that all of our clients appreciate.
Please feel free to contact us to set up a time when we can sit down and go over your own estate plan and address each of the above items. Regardless of whether necessary updates or changes are needed, you will find much-appreciated peace of mind that your affairs are still in good working order.