Review Your Own Estate Plan in 12 Easy Steps
It is not necessary to sit down with your attorney every single year (although we offer free, unlimited, lifetime consultations). But, if you want to take a few minutes and look through your estate planning documents, here is a checklist of twelve things you should look for:
Are the documents original documents? Upon incapacity or death, not having the actual "wet signature" originals will certainly cause problems. You may be in possession of a photocopy with your originals stored with your attorney or someplace else. Take a minute to make sure you know where your signed originals are.
Are the trustee designations up to date? Look at you have selected as your trustees. This is the one area of estate plans that get changed and updated the most. Perhaps one or more of your successor trustees is a little older or not as close anymore? Perhaps you want to consider a professional trustee?
Are your beneficiary designations up to date? Often trusts leave everything to one's children, but that should be specifically looked at nonetheless. More often are there specific gifts made for purposes which are no longer relevant. Are you leaving money to someone whom you previously owed money to but no longer? Have you carved off a small gift to help someone who is no longer in need of assistance?
Is the distribution manner still relevant? Not only should you look at who is inheriting, but also how they are inheriting. When providing for young children the terms of distribution tend to be somewhat restrictive given the uncertainty of the future (no inheritance until age 35, for example). Now that a few years have passed, does the manner of distribution need to be amended so as to create less restrictions? More restrictions?
Is the trust structure still relevant under the new tax law? Under the Tax Cuts and Jobs act, the fundamental structure of trusts have changed dramatically. This does not invalidate any trusts from the past, but tax-savings objectives have certainly changed. This tends to be a bit more technical than the other review points, but traditional A/B Trusts are not as applicable as they once were (many trusts are still A/B Trusts). A/C Trusts are more flexible and can provide greater tax advantages. Feel free to discuss this particular issue with us, but here is another blog post I wrote about this.
Is your health care directive up to date? Look at your health care directives and ensure that your agents are still your preferred choices. Also, look at your specific health care decisions (e.g., end-of-life, organ donation, etc.) and see if there are any changes to your personal preferences that need to be expressed.
Do you have a HIPAA Authorization or HIPAA Waiver document? Under newer medical privacy laws, additional authorization needs to be given to you health care agents relating to medical privacy. Some older directives have applicable language, but a stand-alone HIPAA document is now commonplace.
Is your power of attorney up to date? Your power of attorney appoints agents to represent you should you be incapacitated. So, first you should verify that your agents are still the ones you prefer. Our general recommendation is to have your successor trustees also be your power of attorney agents, but that is a personal decision. Also, powers of attorney can grant authority immediately upon signing or upon incapacity. Look for this provision and verify it is what you want. We normally recommend having the power effective immediately for one's spouse for convenience purposes, but other agents should only be able to act upon incapacity. Again, this is a personal decision but something to consider.
Are your assets properly funded into the trust? All of your assets (with few exceptions, noted below) should be owned by your living trust. Your trust-based estate plan only really applies to assets owned by the trust. Take an inventory of your accounts, business interests, investments, and real estate (and all other assets) to make sure they are owned by the trust. Again, there are exceptions noted below.
Are your other (non-trust) assets properly handled? The general rule is that all assets must be transferred into the trust. However, there are certain assets which merit individual attention: Life insurance policies should have the trust listed as a beneficiary and not the owner (unless you have deliberately made the trust the owner for a specific purpose). Qualified retirement accounts (401(k)s, IRAs, etc.) cannot be owned by a trust, but should have the spouse as the primary beneficiary. If you would like your children-beneficiaries after your spouse to stretch out the IRA, they should be named as contingent beneficiaries. If you would prefer those accounts be liquidated and transferred into the trust, then the trust should be the contingent beneficiary.
Do you have an Ukkestad Funding Document? Under a relatively recent landmark case, assets that are not inside the trust can still avoid probate is a specific statement is made in the trust or in a separate document. (This statement expresses an intent that all (or some) assets be part of the trust even if not formally transferred. Although the Ukkestad case allows this statement to be unaccompanied by a separate schedule of assets, it is a good idea to have one regardless.
Is your estate plan complete, organized, and ready to be understood by another individual? Take a second to sort through any other documents and papers that have been thrown into your estate planning book over the years. Right now you are likely the one most familiar with your plan, but look at the set of documents through the eyes of your family members and loved ones; are thinks clear and organized? Click here for a link to download our Estate Planning Organizer for free, which can help you get organized even more.
By going through these twelve steps you should be in pretty good shape. If you have any concerns or doubts that you may be missing something, please feel free to reach out to us. We provide free estate plan reviews regardless of whether you hired us to create the original plan. You should have an attorney review your plan every five years at a minimum.