7 Fundamental Questions to Consider

The estimates are that between 55% and 70% of Americans do not have a simple will or any estate planning.

If you are the exception to that statistic, CONGRATULATIONS!! You have had the foresight to protect your loved ones and to let them know your wishes, in case tragedy strikes.

However, you’re not done.

Your estate planning documents were not designed to be “carved in stone.” It is always a good idea to review them from time to time. As our lives progress, invariably there are changes in our circumstances or changes in the law. These changes may suggest or require that you need a corresponding change in your estate plan.

The following is a set of questions to consider as you review your documents.

Has there been a change within your family?

• Have there been additions to your family? Have you married or re-married? Are there new children, step-children or grandchildren? Are your children now adults? Have your children married?

• Has a family member passed away? Have you separated from or divorced your spouse? Are you estranged from a child or other family member?

• Has a family member or beneficiary developed special needs? An outright gift to a legatee who is receiving certain public benefits may disqualify them from the benefit program and actually result in decrease in the quality of their care. A special type of trust should be used for the gift to a special needs individual.

• Should the “timing” of a gift be changed? If a beneficiary has developed a condition which adversely affects his or her ability to manage your gift (for example, alcoholism, drug abuse, or a dominating spouse), perhaps the gift should be retained in a trust or a custodial account. Or, if a beneficiary has matured, he or she may now be able to receive a gift outright, without limitations or concern.

Has your “gifting plan” changed?

• Have you made “lifetime” gifts to your family, friends, or charities, which reduce the amount you want them to receive on your death?
• Has your view of a beneficiary’s lifestyle or temperament changed? Has the former loving family member become unpleasant and abusive? Has the “wild child” become productive and responsible? Or vice-versa?
• Do you want to “disinherit” a family member and limit his or her ability to contest the document?
• Have you entered into other agreements, which require a change in your estate planning? Examples include a property settlement agreement, a prenuptial agreement, a post-nuptial agreement, or a business buy-sell agreement.

Should you change the fiduciaries you originally named?

• It’s not unusual for the passage of time to change one’s view about who should act as a fiduciary (for example, your executor, successor trustee, guardian of minors, or agent under powers of attorney). Sometimes, as you get to know people better, you may find that their views no longer correspond with yours, and it would not be appropriate for them to serve as a trustee or guardian of your children. An individual’s age or physical condition may limit one’s ability to effectively serve as a fiduciary. A conflict may have developed and co-fiduciaries may no longer be able to work together. You may have ended your relationship with a corporate fiduciary.

Has there been a change in the size of your estate?

• If the size of your estate has decreased, the amount of your specific gifts may distort your estate plan, and may reduce or eliminate what’s left for your other beneficiaries. Certain estate tax planning may not be appropriate any more.
• If the size of your estate has grown, you may wish to increase the amount of specific gifts to your relatives, friends, and charities.
• If your estate has grown significantly, you may need to take estate taxes into account. You may wish to begin a lifetime gifting program to reduce the size of your estate and to reduce the taxes paid on your death.
• It may be appropriate to consider advanced techniques to limit your estate tax burden, such as family limited partnerships, irrevocable life insurance trusts, and charitable trusts.

Have you transferred your assets into your revocable trust?

• The failure to have your assets appropriately titled can result in unnecessary probate expenses and estate taxes, and may thwart your carefully conceived estate plan.
• If your estate planning includes a revocable trust (also called a living trust or a self-declaration of trust), the failure to transfer title of your assets to your trust may significantly distort the distribution of your assets at your death, and may limit the usefulness of your trust if you become incapacitated.
• If you transferred all your assets to your revocable trust when it was created, great. But, you must make sure that your newly-acquired assets are correctly titled in the name of your trust.

Have you updated your beneficiary designations to co-ordinate with your estate planning objectives?

• The beneficiary designations on your insurance policies, brokerage accounts, pension plans, and other payment-on-death accounts must be co-ordinated with the disposition of your assets under your will and trust. If not, a significant distortion in the allocation of your assets and the payment of estate taxes may result.
• Typically, your trust should be the beneficiary of any insurance policies and brokerage accounts, and your spouse should be the primary beneficiary of your pension plan. There should be jointly-held property only in special cases.
• However, these general rules do not apply to everyone! You must make sure that the beneficiary designations and your estate planning documents are not at odds with each other.

Is the “boilerplate” still appropriate?

• Wills and revocable trusts usually contain many pages of “standard” terms or “boilerplate.” Although these terms may have been appropriate when the documents were signed, changes in tax law, in state law and in your circumstances may require a review of these sections. Provisions which may require special attention include:
  • Definitions. In most estate planning documents, the definitions of “children” and “descendants” are very restrictive. For example, a child born out-of-wedlock to your son or daughter, or one conceived using advanced fertility techniques or one born through surrogacy may not qualify as a grandchild of yours and would be effectively disinherited.
  • Survivorship. Assumptions regarding “simultaneous” deaths and survivorship of you and your spouse may need to be reviewed.
  • Fiduciary Powers. Do you have special assets which require that special powers be given to the trustee or other fiduciary?
  • Do you need to make changes?

If it’s been several years since your estate planning documents were created or updated, it is quite possible that these questions have triggered a need to modify your documents.

I would like to help. If I can be of assistance, please contact me.

Copyright © John M. Varde, P.C., 2016 10/20/2016

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