With the start of a new year just behind us, many people have been taking the time to reflect on the past year and re-prioritize their objectives as they head into 2016. For many of us, we have a goal of kicking off the new year with renewed vigor and a clear mission. We make lists and think of personal habits and business changes we want to make.
But, it’s also important to make sure your own affairs are in order. One important item to add to your 2016 list should be getting an estate plan checkup.
Everyone has an estate, and every estate needs a plan. Whether you consider yourself rich or poor, when you die you will leave behind assets. Your estate might include cash and investments, real estate, tangible personal property, or even an interest in a business.
At its most basic level, an estate plan determines how your assets will be distributed to those you leave behind when you pass away. Because of the ever-changing nature of tax laws, financial markets and the economy, an estate plan checkup is an important activity to revisit. Even if you already have an estate plan, it is imperative that you revisit that plan in order to ensure that it remains relevant under your current family and financial circumstances.
Just like an annual visit to your physician, a periodic review of your estate plan can either reinforce the fact that all is well and in order, or it can uncover the need for additional attention to return your plan to a healthy state. Keeping a keen eye on your plan will go a long way in avoiding disputes between your loved ones, as well as managing the amount of your hard-earned dollars that must go to cover federal and state estate taxes.
No matter what your net worth, a basic estate plan should include a valid will, durable power-of-attorney, health care power-of-attorney, and a living will. Some situations might also make it desirable to use a trust or series of trusts to accomplish your goals.
An estate plan check-up involves a review of the terms of all of these documents, with a particular focus on determining whether the persons you named to act in your absence remain appropriate, and whether the plan for distribution of your assets is still what you desire.
In addition to the implementation or review of your documents, your estate plan check-up should look at related issues such as the desirability of life insurance, disability insurance, or long-term care insurance, as well as the ongoing impact of pre-nuptial agreements or any other documents that affect your assets.
Estate planning is not a static event that you grudgingly do once and then forget about it. On the contrary, estate planning is a continuing process, because life is a moving target that is full of constant change, so your estate plan needs to change as your life changes. A periodic checkup will insure that all is healthy as you move into the future.