by Dawn M. Dale on Dec. 03, 2018


Summary: The third week of October is National Estate Planning Awareness Week (Oct. 15-21, 2018). Estate planning is important for everyone regardless of wealth or family status..


The third week of October is National Estate Planning Awareness Week (Oct. 15-21, 2018). Estate planning is important for everyone regardless of wealth or family status because, if you become incapacitated or pass away without an estate plan, the administration and distribution of your assets will be determined under state law — and the results may not be what you want or expect.

Estate Planning Explained

Estate planning includes the management, protection and transfer of a person’s wealth through the creation and maintenance of an estate plan. The concept of estate planning is important and twofold: (1) to have a strategy that will maintain your financial security and independence during your lifetime, and (2) to ensure the transfer of property and assets upon your death in accordance with your express desires and intent. Both of these issues are analyzed through the unique lens of your family situation and assets, with the goal of maximizing flexibility and minimizing administrative burdens and cost for you and your family.

Benefits of Estate Planning

There are various benefits to having an estate plan. At a minimum, an estate plan provides clear written guidance to your loved ones on what to do with your assets at your death. Perhaps the most important reason to have an estate plan is to ensure that your family is protected and provided for in the event of your incapacity or death. Having essential estate planning documents in place can address several issues including:

  • Who will raise your minor children;
  • Who will inherit your assets and how they will be distributed;
  • Who will care for loved ones who are unable to care for themselves;
  • Who will care for your pets;, and
  • Who will receive your life insurance and other insurance proceeds.

Having an estate plan in place can also ease the time-consuming, administrative burdens of court-supervised guardianship or probate upon your incapacity or death for your family during an already difficult time.

Estate Planning Statistics

According to studies, 6 in 10 adults do not have a will. While many have likely heard that it is wise to avoid probate – the legal process by which assets are administered and transferred under court supervision at a person’s death – many do not understand why probate should be avoided. Three main issues with probate include: (1) the tying up of the decedent’s assets for months or even years while the probate estate is open, (2) the cost, sometimes as much as 5% of the estate’s value is incurred on attorney and court fees alone, and (3) the loss of privacy associated with the probate process when it comes to the decedent’s financial information.

Are Your Affairs in Order?

These are just some of the items you should focus on when reviewing your personal matters and ensuring your legal affairs are up-to-date.  For more details, take our handy Estate Planning Check-up.

  1. When was your power of attorney last updated? A power of attorney is a valuable legal document to appoint a trusted Agent to handle your financial and health care decisions in the event that you are unable to handle these matters yourself, no matter what the circumstance.  It is vital to review and update the power of attorney every several years so that the document is not considered “stale” which could cause it to be potentially rejected by financial institutions and medical providers.
  2. Does your trust/will still match your wishes? Once a will or trust is created, many people simply put it in a safe place and forget about it. There are several reasons to review and update these documents upon significant life changes including marriage or divorce, birth or adoption of a child, a recent windfall of cash or assets, the purchase or sale of a home, or a recent move to another state or country. You may also wish to change the persons you have appointed in the various fiduciary roles of Executor, Trustee, Agent, and Guardian for your minor children. As your life changes, your will or trust must also change to ensure that your needs and desires continue to be met.
  3. Is your business paperwork in order? Whether you own an LLC, corporation, or other type of business entity, annual paperwork and tax returns must be filed each year to ensure that the entity is valid and in full compliance. Make sure all of your documents have been updated, fees have been paid, and licenses have been renewed.  Governing shareholder agreements, operating agreements and bylaws should also be reviewed periodically.
  4. Have you met with your tax advisor recently? Year-end tax planning is essential, especially this year in light of the 2017 tax changes passed by Congress. The IRS has been busy releasing regulations and new forms, so tax season will be much different next year. Learn about your options under the law ahead of time, so you are not hit with a not-so-nice surprise come tax season.
  5. Have you met with the rest of your professional team? Whether the market is a bear or bull, it is important to meet with your financial advisor to review your investment results at least annually and implement an investment strategy for the upcoming year.  You should also meet with your attorney to review and update your estate plan as your situation changes or as other legal or tax issues arise.

Significant Life Changes That Trigger an Estate Plan Review  

Various life changes can impact your estate plan, including:

  • Getting married. Estate planning after tying the knot does not have to be complicated. Simply updating your beneficiary information, purchasing a life insurance policy, and updating emergency contact information are all things that should happen right away. You should also consider preparing a will and a living will. As your marriage progresses, it may make sense to consider a revocable trust as well. Having discussions with your spouse about how you want your estate to be managed depending on different scenarios is also important.
  • Getting divorced. While couples do not plan for divorce, many spouses go through this process. For many, the emotional toll and legal complexities of divorce can be overwhelming. Oftentimes estate planning is overshadowed by the divorce, resulting in unintended consequences. Making sure you make changes to your estate plan as soon as your divorce proceedings have been finalized will make sure your ex will not end up with the house, life insurance proceeds or other assets of yours.
  • Having a child. While adding another member to your family is an exciting time in your life, it is not an excuse to forget to update your estate plan. A new child necessitates major revisions to your estate plan. This not only affects who will inherit your estate upon your death but will also require you deciding who will be the guardian of your children if you should die before they become adults. As your child grows and matures — and more children are added — your estate plan will likely continue to change.
  • Death of a loved one. The passing away of someone listed in your will is often overlooked in estate planning. These individuals may be named guardians to your children, have an inheritance allocated to them, be designated as emergency contacts, or may be named as executors of your estate. Leaving the role vacant can have terrible unintended consequences and necessitates transitioning new people to fill the void left behind by your loved one’s death right away.
  • Moving to another state or country. When you change your residency from one state to another, you must review your estate plan to make sure it conforms with local laws. The same is true if you move to another country. Likewise, if you have property in more than one state or country, special attention must be paid to how those assets will be distributed according to your estate plan and applicable law.
  • Buying a new home. When you purchase or refinance a home or other real estate, you should always make sure the asset is titled appropriately. If you use a trust, sometimes a lender will take a property out of a trust during a refinance. The key is to make sure your title furthers your goals.
  • Change in work benefits. Whether this happened through a promotion, demotion, or your employer just changed the benefits they offer, this could impact the type amount of assets you have available. Look at your estate plan to see if your goals are still achievable or if you can do more with what you have.
  • Buying life insurance. These policies are present in virtually all estate plans and serve as a useful source of liquidity, education-expense coverage, and financial support for your family or loved ones. Make sure to list all beneficiaries under the policy and make sure to update them as time passes.
  • Starting a business. If you start a business or ownership interest changes in a current business, you need to understand what impact these changes have on your estate plan. In addition, there may be tax implications that could affect your heirs without proper planning ahead of time.

Do Not Delay

There are several reasons to review and update your legal matters, including your estate plan. Although the process can be overwhelming and not pleasant to think about, it’s important to take steps now to protect your assets and your family. Before you make any decisions, be sure to contact your estate planning attorney and the rest of your professional team. Understanding how your wishes are affected by applicable law will help make you make a more informed decision and protect you and your loved ones. Contact us today to discuss your situation and learn about your specific options.  Don’t Worry, We’ve Got This!

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