An Excellent Short List of
Reasons to Continually Review Your Estate Documents
I have had the opportunity to meet with a number of
clients recently about either updating old estate documents or drafting new
ones for the very first time. In the process, I have come to understand
that estate planning isn't a check the box item. It is always there
waiting to be updated or coordinated with other aspects of your life. I
thought it would be worthwhile to point out a few key points that should be
reviewed periodically:
1) Individuals named in your documents - Executors,
guardians, Trustees and attorney-in-facts are likely always changing. It
may make perfect sense to have your next door neighbor, who is a responsible
person and a good family friend, serve as your executor. However, if you
move away then maybe your sibling would be better served than continuing to
keep the neighbor in that capacity.
The same theory stays in place for guardians and/or
Trustees. It may be perfectly reasonable to name a good friend or sibling
as the guardian of your children at some point. However, if they end up
with four kids of their own or are promoted to a high demand job, then looking
after you children or managing a trust for the benefit of your children may not
be the best thing anymore.
For these reasons and more, it is nice to dust off the
estate documents from time to time and review who is named to serve in various
capacities.
2) Dispositive provisions for children - When your
children are young, you may tend to give them the benefit of the doubt about
when and how they will inherit assets in the future or you may choose to be
very skeptical of how they will handle money. In either case, your
knowledge and understanding of your children's ability to manage their affairs
grows up with them. You may ultimately change your mind and decide that
it is better to keep assets in a trust indefinitely because the child is in a
highly litigious career, marries an unknown spouse, or simply can't seem to
make good financial decisions. Or they may end up showing excellent
management skills and you don't want to hamstring them by keeping capital out
of their hands when you pass away by tying up the assets in trust indefinitely.
Regardless, choosing to review the dispositive provisions
in your estate document allows you to continue to make smart decision about
your heirs ability to inherit as they grow up.
3) Laws change. Congress - both in Washington and
in states across America - are regularly passing new laws that impact your
estate documents. Maryland passed a uniform Power of Attorney in 2011
which all Maryland residents should obtain. The Federal estate tax
exemption amount is set to revert from $5 million back down to $1 million at
the end of the year. For the first time in years, the Federal lifetime
gift tax exemption amount is $5 million (for tax years 2011 and 2012).
4) You change. I can't count how many clients have
left the DC area over the last 5 years. Nor is it determinable how many
clients added to their family through children or grandchildren, started a new
business, bought a second home, purchased additional life insurance, or have
simply rethought what they want their estate to do.
These and others are constant reasons to review your
estate documents every several years to make sure that they are up to
date. I remember as a kid (I think I was about 7 or 8) one time having a
severe anxiety attack about death. I can't remember what caused it
but I had a long conversation with a family friend who is a pediatrician.
Many of us today still have anxiety in thinking about death which makes
reviewing the estate documents a difficult task.
With that being said, think about how many times we all
complain about Congress not doing what is necessary even though it is difficult.
Sometimes we just need to dig deep and power through a difficult process.
Consider rewarding yourself with nice bottle of wine, a good dinner with
family/friends, or some other treat once it is done. After all it can't
be bad to pamper yourself every couple of years.
