Is it Time to Get Your Estate Plan in Shape for the New Year?

Now that we’ve entered a new year and a new decade, it is time to assess whether your estate plan needs a tune up. To decide whether it might be time to update your estate plan, you should consider the following factors:

Significant Life Changes

Have there been any significant changes in your life since your documents were drafted? If you’ve been married or divorced, your estate plan almost certainly needs to be updated. 

However, there are other changes that may have occurred in your life that could make an update a good option for you. If someone who you have named to serve in a fiduciary role has passed away, you should review whether you have an alternate or alternates named. If you do, an update may not be necessary, but if there is no living person who is named to serve in a fiduciary role in your estate planning documents, you should consider addressing that issue. You should also think about whether you are still comfortable having the people or institutions you have named as fiduciaries serve in those roles. As a refresher, the most common fiduciary roles in an estate plan are those of executor, successor trustee, agent under a financial power of attorney, and agent under a health care power of attorney.

You should also consider what has happened in the lives of your beneficiaries since your documents were prepared. Have beneficiaries matured to the point where you would want to change what your will or trust says about how they will receive distributions? Is a beneficiary named in your will or trust having a difficult time and you are concerned about how he or she might handle an outright distribution? There are different ways to address these concerns in your estate planning documents.

Purchase of New Property

If you purchased real estate outside of New Hampshire since your estate planning documents were prepared, consider how that property is titled. If you have a trust and the recently purchased property is titled in the name of the trust, there is likely nothing further you need to do. But, if you have a will, you may want to consider updating your estate planning documents to include a revocable living trust to avoid having probate in two states.

Passage of Time

We generally recommend that your estate planning documents be reviewed every three to five years. This recommendation is based on our experience that during that period of time, there may be significant changes in the law or your lives that necessitate making changes. 

The turn from 2019 to 2020 did not bring a significant change to the federal estate tax exemption. In 2020, the federal estate tax exemption is $11.58 million per individual, meaning that each person can pass assets with a fair market value of up to $11.58 million without incurring any estate tax liability. If Congress takes no further action, however, the estate tax exemption will return to $5 million in 2026, making this something to watch in the future.

Conversations About Your Health Care Wishes

The new year is also a good time to remind yourself that signing your health care power of attorney is only the first step in ensuring that when you are incapacitated, health care decisions will be made for you that are consistent with your wishes. Have you discussed what is important to you with the individual or individuals you have named as your agents? We are not trying to downplay how difficult it is to have these discussions with your loved ones, but if your health care power of attorney is activated in the future, it will be very difficult for your agent to make health care decisions for you that are consistent with your wishes if he or she does not know what is important to you. Under what circumstances would you want life support removed? Are there specific types of treatment that are unacceptable to you? You should share your thoughts with your agents now and continue this discussion over time as your feelings change. 

Where Are Your Documents?

Do you know where your documents are? We recommend that you keep your estate planning documents in a safe place that will be accessible to your loved ones or friends when you pass away. If you need a copy of your documents, let us know and we would be happy to provide one to you.

As always, if you have any questions, please do not hesitate to reach out. Wishing you a very Happy New Year!