estate planning

2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?

Every so often, it’s smart to methodically go through your estate planning documents and see if any tweaks are needed. Here’s a checklist to guide you through that mission.

Even though it’s critical for your assets, family and legacy, estate planning tends to fall to the bottom of people’s to-do lists. What new parent wants to draft a will while finalizing a nursery paint color? Who wants to talk extensively about life after they’re gone?

Estate planning may not be popular, but it is an essential process to ensure your life’s work is appropriately taken care of after you pass. A strong estate plan benefits everyone. Do you own any assets? Do you have specific wishes for your belongings/assets? Do you have family, loved ones, pets, etc., who you want to see taken care of?

If you answered yes, you need an estate plan.

The thing about estate planning is that it’s not a process that rewards a set-it-and-forget-it approach. It’s good to review your estate plan at least once every few years to ensure that all the information is accurate and updated. Proper documentation is even more necessary if you experienced a significant change, such as marriage, divorce, children, a move, etc., if laws have changed, or if your wishes have changed and you need to make substantial changes to the document.

Luckily, reviewing your estate plan is a relatively straightforward process. If you have any questions or changes you need to make, coordinate with your estate planning attorney, tax professional and financial adviser. Staying on top of your estate plan keeps everything in order, and your wishes spelled out to the T.

Key Takeaways

  • It’s a good idea to update your estate plan every few years.
  • Change in tax law? Haul out your estate plan.
  • You should also update your estate plan if you’ve experienced significant life changes, i.e. marriage, divorce, family, move, etc.

Before you continue reading, grab this free workflow: What Issues Should I Consider When Reviewing My Estate Planning Documents?

Estate Plan Update Checklist

Here are a few things to keep in mind when updating your estate plan.

1. Changes in Residency

Have you moved to a new state recently? Estate laws vary in different states — the status of marital property, rules on executors and powers of attorney, etc. —  so it’s a good idea to review your estate plan to make sure that it complies with local laws and regulations. You should also update your address and keep your family and adviser(s) informed about where your documents are held.

2. Law Changes

Estate laws change over time. You should review your estate plan to see if it has been affected by changes to any state or federal laws like exemption limits, gift tax, probate and more. In some cases, you may want to update your plan in light of recent law changes. For example, with the SECURE Act recently eliminating the stretch IRA, many should be revisiting their estate plans. There is a significant tax difference on withdrawing money from an inherited IRA in just 10 years, vs. over 20+ years as was allowed in the past.

3. General Power of Attorney

Have you designated a general power of attorney? This is the person you authorize to act on your behalf to make business, personal, legal or financial decisions if you become incapacitated. You should make sure that this designation is up to date and accurate. You should also review your appointed agents and confirm that your successor agents are good backups. If you’ve revoked the general power of attorney from a prior agent, keep thorough written records. If you need to revoke a power of attorney, you will want to put that in writing and notify the proper parties

4. Health Care Power of Attorney

You should also review and update your health care power of attorney. In most cases, it makes sense to appoint someone who lives near you to be your agent for this role. If you plan to undergo any health procedures shortly, you should review the medical institution’s Health Care POA form. It’s also good to make your wishes clear about do-not-resuscitate (DNR) provisions and clue your health care POA in on your decisions. You should also affirm any clearly expressed wishes regarding your end-of-life treatment options.

5. Last Will and Testament

Your last will and testament is one of the essential pieces of your estate plan. You should review the details of your will, including your executor, the allocation of your estate and inheritance tax burden, and the plan for any digital assets and information. If you have minor children, you should also name guardians for them and confirm that your plan includes trust provisions to support and protect your children adequately.

6. Trusts

If you have a revocable living trust, you should review trustee and successor appointments. You should also check your estate and inheritance tax burden. While most of us will not face estate tax issue based on the current exemption amounts, many of us could have state estate or inheritance tax issues at a much lower net worth level. You should review your state’s estate and inheritance tax limit. If you have an irrevocable trust, confirm that the trustee properly carries out their duties like administration, management, and annual tax returns.

7. Gifting Opportunities

Gifting opportunities are another critical feature of your estate plan. Because laws surrounding gifts can change over time, it’s essential to review any gifts and update them accordingly. You may also want to change specific gifts or recipients.

Regular Check-Ins Keep Your Estate Plan Healthy

Regularly updating your estate plan can help you to avoid common estate planning mistakes. You can also ensure that your estate plan is entirely up to date and in compliance with any state and federal regulations.

If your life circumstances have changed since the last time you reviewed your estate plan, you may have to make changes when it comes to the beneficiaries, appointed agents and executors.

About the Author

Chad Chubb, CFP®

Founder, WealthKeel LLC

Chad Chubb is a Certified Financial Planner™, Certified Student Loan Professional™ and the founder of WealthKeel LLC. He works alongside Gen X & Gen Y physicians to help them navigate the complexities of everyday life by crafting streamlined financial plans that are agile for his clients' evolving needs. He helps them utilize their wealth to free up time and energy to focus on their family, their practice and what they love most.

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