Six Easy Estate Plan Checkup Tasks
No one likes to think about death and no one likes to spend precious time dealing with something that will happen after they die. You are doing this only for those who come after, to make things easier for them to handle your affairs they way you specified. Even if you have already done the exercise of setting up an estate plan, you do have to keep it up to date. Here are six checkup tasks to do once a decade or when you know something has changed.
Check your beneficiaries
If you own stocks, bonds or bank accounts, you may have designated a beneficiary to get the asset when you die. This designation supercedes any other arrangements you may have made (i.e. your will, your trust, etc).
Naming a beneficiary is the easiest way to hand off property. All you have to do is tell the institution who you want (primary, secondary – who inherit if you die and the primary has already passed) and what percent. All your beneficiary has to do is contact the institution, produce your death certificate and follow any procedures the institution has. There is no waiting for probate of the will, no trustee in the middle, just you, the institution and the beneficiary.
Beneficiaries may also decide to ‘pass’ on inheriting your asset, in which case the secondary beneficiary will inherit as if they were primary.
Be especially careful with IRAs as there are hefty tax and withdrawal consequences for beneficiaries in many circumstances.
You may even be able to designate beneficiaries on your house, car, boat and other real assets – if your state laws allow it.
Check your will
Re-read your will and make sure it is still up to snuff. If you don’t have a will, get one in place, especially if you have minor children or dependents who need a guardian. A will is your only method of saying who gets custody of the kids when you kick off (assuming their other parent is also deceased or unavailable for some reason). You can name a guardian for care and a different guardian for handling the money if you want, just make sure the two will work together for your dependent’s benefit!
You can use prepared forms to do a will, but you do have to have your signature notarized, and you don’t get a do over after you are dead so be sure that the will conforms to the laws of your area so it can’t be overturned.
Review your trust
Your trust can help your heirs distribute your property without going public through probate. Check the trust provisions to make sure they are a) still required based on any changes to federal or state law b) are still what you desire and c) no one named in the trust has pre-deceased you or otherwise changed status requiring changes to the trust.
For instance, if you have an old marital by-pass trust you may need to revise it. Those were used to make sure that each partners estate tax exclusion amount was used to the fullest, instead of having the first spouse to die just leave everything to the remaining spouse. The laws have changed and now allow this circumstance to be covered without any legal documents. The 2012 tax law changes now allow the first spouse to die to port any unused exclusion amounts to their spouse.
If you don’t already have a trust, as with a will, you can use prepared forms to set up a trust, but again, you don’t get a do over after you die so make sure the trust conforms to the laws of your area.
Also review your assets to make sure that you have put the appropriate ones into the name of the trust. It doesn’t do you any good to set up a trust and then keep everything in your own names. A trust becomes a separate legal entity, aka, kind of a person, and if that trust has no assets there will be nothing to distribute. If that is the case with you, then your heirs may have to hire a lawyer and go through probate to get an executor appointed to distribute your loot.
Announce end of life preferences
Let your spouse, children (if adults) and siblings know what your end of life preferences are. If you like, make it formal with a living will document, but know that medical personnel are not bound to honor them. Even if you want everything possible done for you, there may be times when the medical personnel push your family to ‘pull the plug’.
If you have preferences for the disposal of your body, let your family know. Do you want to be cremated; donated; body parts donated; buried or something else?
If you have made any prepaid arrangements, make sure multiple family members are aware and have copies of the paperwork in their possession.
Designate your special things to special people
Heirs fight more over things than they do over money. Things have memories and emotions attached to them. If you want certain things to go to certain people, make a record of it and make sure all hands get the record. Better yet, start gifting these special things now, while you can enjoy the joy of the special person you honor with them!
What do you do when you review your estate plans?