Why You Can’t Just Put It In a Drawer and Forget It

BARRY P. SIEGAL

Partner

"When was your estate plan last reviewed? If the answer is never or more than five years ago, you should consider meeting with your attorney to discuss how changes in law or your circumstances may warrant revisions to your documents.”

REVIEWING YOUR ESTATE PLAN
Why You Can’t Just Put It In a Drawer and Forget It

Over 50% of the population does not have any estate plan. Not a will. Not a trust. Nothing. Further, of those people that have done some planning, what they have is in many cases out of date or has not been fully implemented.

For example, many individuals have a revocable living trust that spells out their intentions regarding the distribution of their assets when they die, but do not realize that these assets are still owned in joint tenancy with another person. What that means is, upon death, the assets pass to the surviving joint tenant, irrespective of the content of the estate planning documents, and the intent of the individual may be frustrated. Similarly, life insurance, 401(K) plans, profit sharing plans and IRAs are frequently overlooked with regards to the beneficiary of the

Sadly, the people that ultimately are hurt by an ineffective estate plan are the individual, if he or she becomes incapacitated, and the individual’s family. The following are some important questions that you should consider to determine whether your estate

When was your estate plan last reviewed? If the answer is never or more than five years ago, you should consider meeting with your attorney to discuss how changes in law or your circumstances may warrant revisions to your documents.

Have there been any changes in your family situation, such as a death or incapacity of a family member or an individual named as a trustee, executor or guardian? Have you or any family member gotten divorced or married?

Has your financial situation changed dramatically either favorably or adversely? Have you or a family member inherited any significant amounts or have you received any funds from a trust?

Have you changed your residence to another state or have you acquired real estate in another state?

Have you or any family member developed creditor concerns as a result of:

  • Potential liability due to your business or profession.Becoming a member of a board of directors.
  • Investing in a business where personal guarantees may be required.
  • Purchasing of commercial or industrial real estate.
  • Have you reviewed the beneficiaries on your employee benefit plans (IRAs, 401(K) plans, pension and profit sharing plans) in the last 24 months? Frequently, the beneficiary of these plans can be changed to extend the payout of benefits and, thereby, defer the payment of income taxes.
  • Have you or an advisor reviewed your life insurance, in particular with respect to whether the amount of life insurance that you carry adequate to meet your needs? Life insurance can be an excellent technique for protecting your assets against potential creditors. Is the ownership of your policies and the beneficiaries consistent with your estate plan?

If either you or your spouse is the owner of your insurance, you should consider the advisability of creating an Irrevocable Life Insurance Trust that could eliminate the proceeds from your estate for estate tax purposes. Even if you own the policies, the beneficiary of the proceeds should be consistent with your estate plan. Normally, if you have a revocable living trust, the beneficiary of the proceeds should be the trustee of the trust.

In summary, your estate plan is not a static set of documents. It must be reviewed periodically to insure that it still meets your objectives. If you’d like to discuss whether your estate plan needs to be updated, contact Mr. Siegal at 312.696.1699 or bpsiegal@golanchristie.com.