As the New Year Starts, Review Your Estate Plan
Like most people, you probably like to avoid thinking about the fact that you are getting older. However, if you fail to plan for the future, it can negatively impact you and those you love.
As we embark on a new year, you should make an appointment with an estate planning attorney and update your will and other important estate planning documents.
Here, we discuss the estate planning documents that you want to have in place regardless of the size of your estate.
Essential Estate Planning Documents
Regardless of the size of your estate, you should prepare the following three documents and update them each year. They will help to alleviate the burden on your family members if you should become incapacitated or die.
- Last will and testament – In most states, your estate will pass to your heirs according to the rules of intestate succession if you die without a will. An attorney can draft a last will and testament to help you to avoid that situation. If you already have a will in place, you should make sure that it is legally valid and reflects your current circumstances.
- Advanced health care directive – This document is known as a living will. If you become incapacitated, it will provide specific instructions to your loved ones and doctors on the type and extent of end-of-life care you wish to receive.
- Durable power of attorney – This document allows a designated person to conduct legal and financial business on your behalf if you become incapacitated.
Additionally, you may wish to consider creating a trust as an alternative to a will or in addition to a will. A properly created trust can help your family to avoid probate costs. It can also minimize estate tax consequences.
Every year, you should also review your life insurance policies and retirement accounts to make sure they reflect your current situation.
Circumstances That May Require a Change in Your Estate Plan
Most of us face changes each year that impact our families or our personal and professional lives. A new year marks the perfect time to reflect on how these changes could apply to your property and assets.
As Forbes notes, you should communicate any new circumstances in your life to your estate planning attorney so that any necessary adjustments can be made to your estate planning documents.
These changes can include:
- Marriage or divorce
- Birth or adoption of a child
- Dependents increase or decrease (as in a child turning age 18)
- Death of a family member
- Acquisition of a significant asset or debt
- Significant increase or decrease in income
- Entrance to a new business venture or partnership.
If you fail to inform your estate planning attorney of any of the above, it could render your will or other documents invalid, resulting in potential disputes among your heirs.
Additionally, you should review your estate planning documents if there are any relevant changes in the state or federal tax codes.
Author: Jacob Maslow