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The New Year is a Good Time to revisit your Estate Plan

January 5, 2016 by Timothy A. Costello in Articles

The New Year is a Good Time to revisit your Estate Plan

Ok.  So reviewing your estate documents may not sound like the most exciting way begin the new-year.  However, it may be one of the most important things you do this year and, in reality, does not take a great deal of time.

  1. Check your Beneficiary Designations

Many of us have a retirement plan that we started soon after we began a job.  Alternatively, we may have funded our own retirement plan or life insurance policy.  Often, we set up these plans some time ago.  Do you remember who you selected as the beneficiaries?  Many may be surprised at who they designated as their beneficiaries many years ago.  Sometimes the beneficiaries were named prior to your current marriage.  Other times it may list a divorced spouse as the beneficiary.  Keep in mind that for many plans, divorcing your spouse does not alter your beneficiary designation.  You must remove them yourself and replace them with a new beneficiary.  For many people, these plans are the most significant assets they own.  Finding out who your beneficiaries are often entails a quick phone call to your plan administrator and requesting that they send you a list of the current beneficiaries.  Such a quick call now, could save a great deal of heartache later.

  1. Your Estate Documents

When one looks at the typical estate plan, it usually contains your Last Will and Testament, a General Power of Attorney, an Advanced Medical Directive, and sometimes a system of Trusts.  Collectively, these documents may be many pages.  However, reviewing the key provisions for each does not involve having to read the entire document.  By locating the right clauses you can review them fairly quickly and check to see if they still represent your wishes.

Your Will and/or Trust

Your Personal Representative and/or Trustees

Your Personal Representative is the individual responsible for administering your estate through probate.  Should your Estate Plan contain one or more Trusts, your Trustee is the individual who administers your Trust.  These people should be people you trust, are financially responsible, and believe are competent to handle their duties.  Are the people you selected years ago still good candidates to perform these roles?  If not, you should strongly consider updating your documents to designate someone else.

Division of Property

Typically, a Will and/or Trust has two sections that deal with the distribution of your property.  One section pertains to the distribution of your personal items.  These are items such as furniture, art, or other types of collectibles.  Are there any special items you have acquired after you executed your documents that want to leave to someone?  Are you happy with how your personal belongings are distributed in your Will?

There typically is another part of your Estate Plan where you distribute the rest of your belongings (commonly referred to as your “Residuary Estate”).  This is the bulk of your assets.  It covers items like real estate, financial or investment accounts, and a host of other assets.  As was the case with your personal belongings, review how these are distributed to ensure that it still represents your wishes.  Are there beneficiaries listed who have turned out to not be financially responsible?  Perhaps a trust for that individual would be a good way to ensure that their inheritance is used wisely.  Are their new family members that you wish to provide for, such as grandchildren?   If you feel that the division of your property does not reflect your wishes, it is a good idea to consider updating your documents.

Your General Power of Attorney and Medical Advance Directive

These documents allow you to select trusted individuals to make very important decisions for you when you are unable to do so yourself.  Your General Power of Attorney pertains to selecting someone to handle your financial affairs.  Your Medical Advance Directive, often referred to as your Living Will, pertains to selecting someone to make medical decisions on your behalf.

Are the people you selected still the right fit for you?  It is also important to review the choices you have made in each of the documents.  For your General Power of Attorney, have you acquired significant assets or a business after you executed it?  Often, it is a good idea to have such items specifically identified in your General Power of Attorney.  For your Medical Directive, have your feelings changed regarding how you wish your medical care to be handled?  Has any advances in medical technology changed how you feel about any of your choices?  Again, if your documents do not reflect your wishes, they should be updated.

  1. Updating your Documents

Over all, your Estate Plan should be a system of flexible documents which can address many of life’s natural changes.  However, as you grow older, your feelings about certain aspects of your plan may change.  In such an instance, do you need to have a completely new Estate Plan?  In many cases, updating your Estate Plan does not require an entirely new document.  For example, assume that after you executed your Estate Plan you began to collect antiques.  One of your children has a greater interest in the collection and, therefore, you wish to leave that child the collection as a gift under your Will.  This change can be done by executing what is called a “Codicil.”  A Codicil is a short addition to your Will which maintains all of the original provisions in your Will but also allows you to add new ones.

Similarly, updating your Medical Directive or your General Power of Attorney need not a complicated procedure.  Your estate attorney already has much of the background information on hand so updating them with additional information or changes should not be a costly or time intensive task. Just as fixing your car is typically far less expensive than buying a new one, so too can be updating elements of your Estate Plan.  When in doubt, please feel free to contact me to review your documents to further discuss what changes, if any, may be required to update your plan.