Time to Complete or Update Your Estate Plan

by | Apr 14, 2020 | Wealth Management

We think it is important to make good use of the extra time that many people have during this unusual time. Now is an excellent time to take care of those to-do items that have been on the list for a while. For many people, this could mean completing an estate plan or updating an outdated plan. Having an estate plan goes well beyond just a will or trust. A basic estate plan most likely will have the following documents:

1. Will

2. Trust

3. Power of Attorney

4. Advanced Care Planning

5. Guardianship paperwork (for minor children)

Taking Care of Minor Children

Perhaps the most important document if you have minor children is to have a named Guardian. This is the person(s) you choose to raise your children if anything happens to you prematurely. When minor children are involved they must be protected with this document. It is tragic enough for them to lose their parents and not knowing who will take care of them only makes the situation worse. If you have minor children, please make sure this is the first item you take care of.

Taking Care of Your Heirs

A will is the most basic estate planning document. It simply states what your wishes are after you pass and what your heirs receive. A will is simple to produce and important, especially if there is not a trust in place. A will does require going through probate and in California, this is an expensive and arduous process. Before COVID-19 probate took about 7–12 months and is considered to be public record.

A trust provides privacy and is not subject to probate. The trust often is considered to be more ironclad than a will and allows for greater flexibility. With a trust, you can do things like dictating what the money can be used for (i.e. education or buying a home) and set parameters around accessing the money (i.e. kids cant touch money until they reach 35 years old). If you are not sure if a trust is right for you to check out our blog for 5 Reasons to Consider a Trust.

An important consideration is when to establish the trust. Some people just use a pour-over will that creates the trust upon death while other individuals may create the trust while living. Speak with us or your estate planning attorney to consider what is best for you.

Taking Care of Yourself

It is important to make sure you have a plan in place for who will take care of you in case you needed it. A power of attorney is important since it gives an individual you choose the ability to take care of your financial affairs in case you cannot. This can be a person you trust like a friend or family member, or even a professional if you prefer. A power of attorney when activated can make decisions on your behalf without your consent so be careful choosing someone you trust. You can choose for the power of attorney to immediately become active or it can be “springing” and only become active only upon your incapacitation. An estate planning attorney can help you choose what is best for you.

Advanced care planning is to make sure your wishes are met regarding your health. You can choose a person to make decisions on your behalf or you can create clear instructions ahead of time. This is important so you determine the type of care you receive and address many issues like if you want to be put on life support and other tough medical decisions. 

To help protect yourself, be very careful in who you choose for each of these roles. Many professionals recommend that you choose separate individuals for these roles to reduce the burden on them and to remove potential conflicts of interest.

When Should You Update Your Estate Plan

You want to review your plan about every five years or when there is a major life event, like a death in the family.  The laws surrounding estate planning continually change and trusts done in the last few years may be outdated with all the recent tax law changes.

We have seen many trusts that were established during the 2000s that were unnecessarily complex by today’s standards since they were designed to meet estate planning laws at that time. A basic revision can greatly simplify and modernize existing trusts.

Now is an excellent time to create an estate plan if you do not have one or to review it to make sure it still makes sense for you. We are happy to provide complimentary analysis and can refer to an estate planner if needed.

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