Does My Estate Plan Need a Check-Up?

Do you currently have an estate plan in place?  If not, then, first and foremost, creating one should be a top priority for a host of reasons, such as:  (1) preventing you and your assets from becoming subject to a judicially supervised guardianship and/or conservatorship in the event of your incapacity; (2) avoiding or minimizing the probate process for your loved ones after your death; (3) ensuring that only your intended beneficiaries receive your assets at death; and (4) minimizing or avoiding federal estate tax in certain estates.

If you already have an estate plan, then now might be a good time to wipe away the dust and review it to make sure it still meets your needs.  The implementation of an estate plan should not be regarded as a once-in-a-lifetime event where you execute documents and then forget about it.  Instead, estate planning should be viewed as an ongoing process that needs to be updated periodically to reflect the constant changes in your life.  Look at the year that you executed your current estate plan, and think about all of the changes in your life that have since occurred.  Have you married or divorced?  Has your spouse or other named beneficiary died?  Has your named personal representative and/or trustee died or otherwise become incapable of serving in that role?  Did you have a significant change in assets or their values (increase or decrease)?  Have any children or grandchildren been born?  Have you moved to a new state or purchased or inherited property in another state?  Keep in mind that any of these or other major changes in your family or financial status will impact your current estate plan.

You also should review the structure of your will or revocable trust to ensure that it remains the best fit for the current federal estate tax regime.  For instance, did you execute your plan between 1997 and 2009?  During this time, the federal estate tax basic exclusion amount increased from $600,000 to $3,500,000.  Additionally, from 2010 to 2012, federal estate, gift and generation skipping transfer taxes underwent significant changes, and the ability to “port” (via a mechanism called “portability”) the basic exclusion amount to the surviving spouse was introduced.  Some plans implemented during these times may have become antiquated in light of these changes, especially when combined with the 2019 increase in the basic exclusion amount to $11,400,000 for an individual and $22,800,000 for a married couple.  Some of these plans might include a trust structure that first funds a family or bypass trust with an amount equal to the federal estate tax exclusion amount in effect at death of the first spouse, which can result in little or no assets passing to the surviving spouse.  While these plans worked great during those times, they likely will have unintended, negative consequences today.

These are only a few of the possibilities that you should consider when reviewing your estate planning documents.  If you are unsure if your current plan is outdated, please seek the assistance of an experienced estate planning attorney to guide you in this determination.