The New Year provides an opportunity for a fresh start. One way to help ensure that your fresh start involves a secure future is to review your estate plan.
How can an estate plan help secure the future? Estate plans can include a number of different legal tools. Wills and trusts can be used to help ensure assets are distributed in line with your wishes. When putting together these plans, it can also become clear that the use of a trust can provide immediate tax benefits. As a result, an estate plan can lead to a secure future not just for your legacy, but for your own immediate future as well.
Why should I review these documents? A recent piece in Forbes touched on the importance of periodically reviewing the documents used to put together an estate plan. It notes that a review is important for any estate plan. This is true whether your plan is robust or skeletal.
There are a number of factors that can impact an estate plan and trigger a review. Three of the more common concerns noted in the piece include:
- Were there any major life changes in 2016? Did anyone get married, divorced, have a child or was there a death in the family? If so, you should update your plan. A major life change does not always translate into a change in the distribution of assets. This means an unintended beneficiary could still receive payments from a trust or other assets if action is not taken to remove the person's name from the list of beneficiaries.
- Were there any changes in health status? Take a moment to consider whether you or a loved one developed an illness or suffered an injury that could impact your future financial needs. If this is true, it may be wise to look over trusts and other documents to see if they need to be adjusted. Distributions may need to be increased to help ensure that enough funds are present to cover any additional cost requirements associated with a change in health status.
- Did the tax laws change? Tax law is always evolving. As a result, the laws that impact your plan may have changed. Some changes have minimal impact; others can translate to a major problem. It is likely time to consider adjustments to your plan if, for example, a change in tax law results in taxing your assets at a higher rate.
It is wise to have legal counsel review your plan to help you understand the true impact of these and other factors. An attorney can help adjust these documents as needed, and add legal tools to your plan to help better ensure it is structured to meet your needs.