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Keeping Your Estate Planning Up to Date

Elizabeth C. Marshall

You never know when you are going to need that estate plan.

The following is a general guide to reviewing and updating your estate plan.  The frequency of following this guide will vary from client to client, but we suggest that you contact us at least once every two years to review and update your own estate plan.

Locate and secure your original estate planning documents.  Your original Last Will and Testament, revocable Trust Agreement, and any amendments to these documents should be kept in a safe place, such as your safe deposit box or a secure location at home.  Your original Durable Powers of Attorney and Health Care Advance Directives should be made available to the individuals who would need to use those documents if you were unable to make decisions for yourself.  If you have an Irrevocable Life Insurance Trust, a Charitable Remainder Trust or Charitable Lead Trust, or a Qualified Personal Residence Trust, the originals of these documents should be in the possession of you or the trustee.  The persons or organizations serving as personal representative of your estate and trustee of your trusts will need the original documents at the time they assume responsibility for your affairs.  They should be advised of the location of the original documents and given instructions for how to gain access if needed.

Review your assets.  The best estate planning can be wasted if the assets do not match the plan.  For example, many estate plans are designed to maximize the benefit of the estate tax exclusion (which increased to $1,000,000 on January 1, 2002, and is scheduled to rise again on January 1, 2004).  If your assets are held jointly with your spouse or another individual, it will be difficult if not impossible to use these assets to fund the tax-exempt trust when the first spouse passes away.  The increases in the exemption scheduled over the next eight years require a regular review of assets to be sure they match the plan. 

Review and retain copies of your beneficiary designation forms.  Many clients have large insurance policies, annuities, and retirement plans.  The selection and designation of a primary beneficiary and a contingent beneficiary is an integral part of the estate plan.  It is critical that all clients with these types of assets keep copies of the current beneficiary designation forms, both for review with legal and tax advisors and for their records. 

Keep your related records organized and accessible.  This is a good time to make sure that copies of prior years’ income tax returns and gift tax returns are in your files or the files of your tax advisors.  Copies of funeral instructions should be reviewed and given to those persons you expect to attend to these matters when you pass away.  Information identifying your legal, accounting, investment, and insurance advisors should be kept in a location accessible to your personal representative and trustee. 

Consider whether it would be beneficial to make changes in the distribution plan.  Changes in the family bring many clients in for a review and update of their estate plan.  These can include the birth of a grandchild, the marriage or divorce of a client or member of the client’s immediate family, the unexpected death of a beneficiary, or a concern regarding a beneficiary’s ability or willingness to handle a substantial inheritance. 

Consider whether you are appointing the correct fiduciaries.  The person or organization named to serve as the personal representative of your estate or trustee of your trusts is a key player in your estate plan.  It is wise to review this choice periodically to determine whether they will be able to carry out your instructions at the appropriate time.  If you have named a child or children to serve, their ability to work together and manage your estate (often from a distance) should be given a practical and thorough review.

Obtain timely advice concerning changes in the law and their effect on your estate plan.  Most of our clients are generally aware of major changes in the estate and gift tax laws, since these are fairly well publicized in Sarasota.  A careful review of their effect on your own estate plan is important, however, since the information in the press can often be misleading and can occasionally be altogether wrong when applied to your particular circumstances.  In addition to reviewing the changes in the estate and gift tax laws, this gives each client the opportunity to find out if changes to the laws governing estate administration, Wills, and trusts have changed in ways that will significantly affect your estate plan. 

Our firm sends its estate planning clients a newsletter when major changes are made in the estate and gift tax laws.  This not a periodic mailing but one which is intended to highlight important changes when they do occur.  It is important to keep in mind that a newsletter cannot cover all changes in the law and their effect on your estate plan, so we do recommend that you keep your own planning up to date.  We are always glad to work with you in this process.
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