It is important to update an older estate plan.
Things tend to get worse when no one tends to them.
Gardens become overgrown with weeds.
Buildings fall into disrepair.
After all, the Second Law of Thermodynamics seems to apply to all of life.
According to a recent NASDAQ.com article titled “Is Your Estate Plan Up to Date?,” this same truth applies to estate planning.
An estate plan will not be effective indefinitely.
If you have not reviewed your estate plan in several years, you should schedule a time to do so.
Many factors impact whether you will need to update your plan.
Pay specific attention to these elements when reviewing your documents.
Change of residence.
Not all states have the same laws for estate planning.
It is important for you to work with an estate planning attorney in your state of residence to ensure your plan meets these specific laws.
Even if you do not move to a different state, you may need to update your address on your documents.
For example, in Kansas your general durable power of attorney must identify your current personal residence by street address and legal description.
Similarly, you should inform your financial advisor and tax accountant of your changes.
Changes in tax law.
When laws are updated regarding taxes, your plan should change to address these.
If it has been years since you have updated your estate plan, you likely will cause problems for your heirs.
There have been significant changes to tax law within the past five years alone.
And there may be more to come.
Power of Attorney documents.
When it comes to power of attorney documents, many banks and investments companies do not accept old ones.
This is one reason to update the documents.
Another reason is the person you choose must still be able and willing to serve.
If this is no longer the case, you should find another trustworthy individual.
A power of attorney should not be neglected because it provides authority for someone to make personal, legal, business, and financial decisions on your behalf should you become incapacitated.
Health Care Power of Attorney and HIPAA Releases.
These documents allow you to designate one or more persons to speak with your health care providers and make medical decisions on your behalf.
Even when it comes to healthcare, your spouse does not automatically have rights to access your medical records or to making such choices.
You also should put in writing your wishes for life support and end-of-life care.
Last will and testament.
You have much to lose if your last will and testament is outdated.
This document is responsible for dividing assets, nominating guardians for minor children, and appointing an executor for the estate.
It is important to review all of these elements.
Passing assets to minor children through a last will and testament can complicated matters.
When you update your estate plan, you may choose to include a trust to meet specific needs of your family.
If you have a revocable living trust, then you must retitle assets to the trust now (or via beneficiary designation) to avoid probate at your death.
By reviewing and updating your estate plan regularly, you can be confident your plan will meet your current circumstances.
Reference: NASDAQ.com (July 28, 2021) “Is Your Estate Plan Up to Date?”