Even if you have done the “responsible thing” and created an estate plan to control the distribution of your property after your death, it may be time to have that plan looked over by an attorney. Changes in your life, and the legal system, may have a negative effect on how your property is passed on.
Please look over the questions below to help determine if it is time for an attorney to review your estate plan.
1. Do you have an Estate Plan?
Well – of course – if you don’t even have an estate plan prepared then you have nothing to bring “up to date”
If you have a Will and Trust then at least you have some means of directing the state in how you want your property distributed.
If you do not tell the state (or your family and beneficiaries) how you want your possessions distributed when you die, then the state will decide for you. This is known as “intestacy.”
2. If you have a valid will or trust, have you had it reviewed recently?
If you’ve gone to the effort of creating an estate plan in the past, when was the last time you had an attorney review it? An outdated estate plan may be worse than no estate plan at all.
Even if there have been no changes in your family or financial situation, there are changes in tax and inheritance laws almost every year. An outdated estate plan might expose your estate and your beneficiaries to excessive taxation and expense.
I understand that people view estate planning as a single ‘event;’ but, in reality, estate planning is a process. As your family and financial situation change and evolve over the years, an update or review of your estate plan could save your family considerable grief.
Remember – Once you’ve passed – or your heath is so impacted that you cannot act on your own behalf – it’s too late to make changes.
3. Are all of your heirs over the age of 21?
This is especially important if you were responsible and created an estate plan while your children were young.
Maybe your current estate plan is designed to have your younger children provided for, with trusts established on their behalf and appropriate guardians named to keep track of the funds.
If your children are over 21, maybe it’s time to revisit those portions of your estate plan to make sure that your (now independent) children are provided with their inheritance to help them finance their own plans and dreams.
4. Are your heirs financially responsible?
Even if your heirs are now adults, are they financially responsible adults?
Being a parent means understanding who our children are – Are they responsible? Are they battling addictions? Are they vulnerable to being cheated or taken advantage of?
If you are the parent of a child battling issues such as this, then there are ways to ensure that their inheritance is properly managed on their behalf – through independent trustees, or clauses in your trust that allow the child access to their inheritance, but not all at once.
Even worse – providing a significant inheritance to a child with a dangerous addiction could allow that child to cause significant harm to themselves and others.
Inclusion of appropriate clauses, designed to protect the inheritance that you are trying to pass to your children, can be a crucial method of making sure they are taken care of. O
5. Are you absolutely certain your assets will not be subject to probate?
Because people tend to see their estate plan as an ‘event’ and not a ‘process,’ people tend to forget to continue to properly fund their trusts.
Did you buy a new house? Great!, But did you remember to title the house under the trust? If not, then you may have purchased an asset that might require a probate proceeding in order to transfer or sell.
The same warning holds true for cars, bank accounts, and business interests. If those assets are not titled in the name of the trust, then (technically) those assets are outside of the trust estate and may require probate.
Remember – if an asset requires a probate proceeding to transfer it, there could be a delay for as long as 18 months to 3 years to legally transfer the asset – not to mention the significant costs involved.
6. Does your estate plan provide your heirs with asset protection? Divorce protection? Creditor protection? Or Lawsuit protection?
Although the most common method of asset distribution to heirs is an outright (or ‘direct’) distribution, an outright distribution exposes the inherited assets to creditors of your heirs.
There are methods available in trust construction that can allow for an heir’s distribution to be protected from creditors to the extent legally possible.
7. Have you married, divorced, or remarried since your estate plan was created?
First, second, or subsequent marriages can dramatically change your estate planning needs.
This is even more important if you and your spouse both have children from prior relationships. Make sure that your children are properly protected and the correct people are in charge of cleaning things up when you are gone.
Proper planning will help prevent incorrect results.
If any of the warnings above apply to you, then you should definitely consider making an appointment to have your estate plan reviewed by an attorney. Please reach out to our office to set up an appointment as soon as possible.