New Year’s Resolution: Review Your Estate Plan and Beneficiary Designations

In addition to finding your favorite party hat and gathering up the confetti to celebrate the beginning of 2015 on Wednesday evening, this is a great time to review your estate plan and beneficiary designations.  Because situations change–marriages are celebrated, children are born, deaths occur–it is important to frequently revisit and update your estate plan.  Here are some pointers to get you started.


Draft Basic Documents.  First, ensure you have at least the basic estate planning documents in place.  This includes a will, power of attorney, medical power of attorney, and an advanced healthcare directive (often called a living will).  I also recommend that everyone prepare a sort of inventory list that includes information about your bank accounts, insurance policies, retirement accounts, property ownership, etc.  Additional documents to consider if your circumstances warrant them include trusts and life insurance policies.  If you do not have these documents in place, I highly encourage you to spend some time with an attorney getting them drafted.  In the new year, I will be posting a series of blogs outlining each of these basic estate planning documents and offering pointers on what to consider and where to find certain forms.

Prepare a File and Communicate Its Location.  If you have already drafted the basic documents necessary, you should ensure that they are all collected in one place and be sure to tell someone where that place is!  It is a good idea to have all of your estate planning documents together in a safe location, whether that be in your home, in a bank safe deposit box, or with your attorney.  Remember–if you elect to place your information in a safe deposit box, you need to ensure that the necessary persons–likely you executor or power of attorney–are able to access that box.

Review Documents for any Necessary Updates.  If you already have your documents drafted and together, good job!  Now, you will want to take a few minutes to review each of the documents to ensure no changes need to be made.  If you had a major life change since your revised your will (marriage, divorce, birth of children, etc.) be sure to consider than when making your updates.  It is especially important to review the persons included as heirs, guardians, agents, or executors to ensure that they are still willing and able to serve, and that nothing has changed your mind about including those persons.  Additionally, when reviewing your will, it is important to consider whether any property listed has been sold or transferred such that the will should be modified, or whether additional property was acquired that needs to be included.

Review and Update Beneficiary Designations.  Remember that not all property passes under your estate.  There are certain assets that pass via contract.  For example, if you have a 401(K) at work, you likely appointed a beneficiary of that policy.  Regardless of what your will says, that beneficiary designation will govern distribution of your 401(K).  This also commonly occurs with life insurance policies, pensions, transfer on death accounts, and accounts held as joint tenants with right of survivorship.  It is a good idea to keep a list of accounts and policies for which beneficiaries have been designated and review them to determine if updates are needed.

Determine Potential Estate Tax Liability.  Currently, the federal estate tax exemption is  $5.34 million per person.  This be adjusted for inflation and, therefore, slightly increase in 2015.  It is a good idea to determine the estimated value of your estate to determine if you could potentially face estate tax liability.  This is particularly important to consider whether any events occurred that might have increased the value of your estate since you last reviewed your plan.  If you think that you may be close to the exemtpion limit, you should meet with your attorney and account to evaluate various options to help avoid liability–which is 40% on any amount over the $5.34 million exemption.

Although estate planning is not as fun as some of the other New Year’s Eve activities, it is extremely important to ensure you have an adequate plan in place that accurately reflects your wishes.

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