Estate Plan Check-Up
It is always a good idea to review your existing estate plan on a regular basis to ensure that it still accomplishes your goals and reflects your current situation. Even if you don’t have a will yet, you still probably have an “estate plan” of sorts – retirement accounts, life insurance, living will or powers of attorney are all elements of your estate plan. Over time, many aspects of your life can change requiring modifications to your estate plan documents to reflect those changes. Such changes can be internal (e.g. your desires regarding who gets what inheritance can certainly change constantly or the decision on who the best person is to act as your personal representative or guardian of your children) and changes can be external (e.g. your estate may have changed in value requiring analysis from a tax perspective or you might have purchased property during the year). What is most important is that you consider the changes that have occurred to you and your family during the previous year or two, re-evaluate what the goals of your estate plan are and then sit down and review your estate plan documents to make sure they are consistent with your goals. These steps can be done on your own or with the help of an attorney knowledgeable in estate planning matters.
Below I have provided a checklist of issues to keep in mind when reviewing your estate planning goals and documents. It is by no means exhaustive nor detailed but provides a number of starting points of issues to explore when conducting an estate plan check-up. When is the best time for a check-up? It may be a little more time-efficient to do so right after you have done your taxes so you have a really good idea of what your financial situation is like, however, you might also be burnt out from doing your taxes and never get around to the estate plan check-up and having a perfectly accurate picture of your finances is not necessary to perform nearly any of the steps below. So here is my checklist (also available in PDF format here)
ESTATE PLAN CHECK-UP CHECKLIST
Taxes – Always seek the advice of financial professionals (CPA, financial planner) when considering tax implications.
- Do you want to make any gifts this tax year? Must be made by Dec. 31st
- Charitable donations
- Make donations
- Collect all receipts from the year for tax returns
- Non-charitable donations
- $13,000 per year, per person ($26,000 for a couple) tax exempt
- Gifts in excess of $13,000 are “taxable” and reduce your unified gift & estate tax exemptions at federal level.
- No Washington State tax on inter-vivos gifts. This creates an opportunity for gift-planning if your estate is greater than $2 million
- Retirement Account Contributions – IRAs, SEPs, Roth IRAs
- Education Savings Plan Contributions – 529 plans, GET, Coverdell ESA
- Capital gains/losses recognition
- Trust management – do you have existing trusts set up?
- Trustee should pay out distributions for the tax year
- Do you need to make contributions to existing trusts?
Estate Plan Review
- Beneficiary designations of all relavent documents – Who are beneficiaries? Do they need to be changed? Have the account balances changed so that one beneficiary now receives more of your estate than intended?
- Life Insurance Policies
- Bank Accounts (POD)
- Brokerage Accounts/Mutual Funds (TOD)
- Retirement Accounts – IRAs, 401(k), Pensions
- Joint Accounts – especially bank accounts with an added account owner for convenience only (no ownership in account)
- Life Insurance Policies
- Are you premiums paid for the year?
- Is the amount of coverage still adequate for your needs? Is it too much?
- When will the policies lapse?
- Estate Plan Documents – Do the documents need to be updated? Do you know where the documents are?
- Who are your named executors, trustees, guardians, attorneys-in-fact? Are they still the best/most appropriate choice?
- Does your executor know where estate plan documents are stored?
- Do specific gifts listed in your will still exist? (cars, real estate)
- Do amounts and/or recipients of gifts in your will or trusts need to be changed/updated?
- Change in financial situation of beneficiaries or testator?
- New family members? Deaths of beneficiaries?
- Charitable organizations need to be changed?
- Have you purchased real property that needs to be accounted for? (Especially if out-of-state property = Revocable Living Trust)
- How old are your existing Power of Attorney documents? If more than 2-3 years, consider executing new documents.
- Health Care Directives/Living Will – any new medical conditions that need to be specifically considered?
- Changes to burial/cremation instructions?
- Personal Property Memo – Is it current? Is it lost? Is there new property to be included in the list?
- Business Buy-Sell Agreements
- New owners to be included in new versions?
- Updates to valuation necessary? Insurance policies current?
- Safe deposit box
- Are contents necessary and current (e.g. old versions of wills or other legal documents can be removed and replaced with current versions)?
- Does your executor/spouse know about the existence of the safe deposit box or is it otherwise listed in your will?
- Account number/password index – Do you have a way to provide important account numbers and passwords to others in case of an emergency & afer your death?
- SECURITY ISSUES are paramount.
- Software is available to manage all of your online passwords