Happy Groundhog’s Day!
When you think of Groundhog’s Day you may think of Punxsutawney Phil who checks for his shadow each year to forecast changes of the season. Or you may think of Bill Murray reliving the same day over and over. For some of us, there may be moments in our lives where we also feel like we are stuck reliving the same day (hello 2020). However, the truth is, change happens. And some changes in our lives trigger the need for an estate plan review, and to update our estate plans.
Estate Plan Review – Children and Grandchildren
Changes in your family are the most obvious. For instance, having children could mean having to update your beneficiaries or name a guardian for the kids should something happen to you. New children could also mean re-considering what kind of protections you have in place for them. Such as, looking at whether your plan is set up to protect a fiscally irresponsible child versus giving them a “lump sum”, where they could spend your entire life savings in a month. Or would you rather the child inherits through a trust, which would include provisions to help save the inheritance and a trustee to guide them.
Estate Plan Review – Marriage and Divorce
Got married? Getting married would typically lead to you adding your spouse to your existing estate plan – either as a beneficiary or in a trusted role, like Power of Attorney. Got married again? A new marriage could also lead to a blended family. With blended families you want to make sure both sides are protected, and both families’ needs are properly planned for. Reversely, going through a divorce could also have effects on your estate plan. If your now ex-spouse is named in your plan, as a beneficiary or as someone who is making decisions for you, you should consider if you still want them in that role.
Estate Plan Review – Changes In Personal Finances
If there are changes in your financial accounts, you should also make sure your plan is up to date. New assets, like accounts, insurance policies, or homes, should be properly accounted for. If you have a trust, they should be funded to the trust, so the assets pass how you intend to who you intend, and in the way you intend. Or, if you do not have a trust, having beneficiaries named on accounts and policies helps ensure they still pass along to who you want. Another change to your assets could be if you gained a creditor problem since you created your estate plan. Going back through your estate plan and making sure your assets are protected from potential lawsuits can help preserve your wealth for future generations to come.
Estate Plan Review – Health Changes
Another time to check your estate plan is if there have been major changes in your health. Making sure you have a Health Care Power of Attorney in place to make medical decisions for you is crucial, especially if it comes to the point that you are no longer be able to make the decisions for yourself. Similarly, making sure you have a living will or guidelines for your Power of Attorney to follow can help make sure your wishes are continually met, while also taking some of the burden off of your loved one that they are doing what you would want in various situations.
Estate Plan Review – Changes In Law
Finally, you may want to consider making changes to your estate plan when there are changes in the law. New presidential administrations can bring changes in estate and gift taxes that can make it necessary to revisit your estate plan to make sure it still works for you. For instance, the current estate and gift tax exemption is $11.7 million per individual and $23.4 for couples, anything under those amounts can pass tax free. But, if the exemption is lowered under the new presidency and Congress, individuals who were previously exempt may now have to plan for taxes and come up with new strategies to protect what they have spent their lives building.
This Groundhog’s Day as we look for changes in the weather, we recommend you also look for the changes that have occurred in your life since the last time you updated your estate plan. Making sure your estate plan is up to date means you have protections in place for your family. More importantly, your plan will continue to work for you even in the event of major changes.
To have your current estate plan reviewed or to hear more about the protections our estate plans include, please contact our office, (248) 409-0256. We offer complimentary initial consultations.
Matthew A. Ferri, J.D., M.B.A., is the Founder and Principal of Life Focus Planning, a Michigan based estate planning law firm. He is an estate planning attorney with offices in Bloomfield Hills, Michigan and Shelby Township, Michigan.