“I’m too busy.” “I’ll get to it later.” “I don’t know if I need to plan.” “It’s too overwhelming to think about.”
Do these excuses sound familiar? These are just some of the many reasons people make for putting off creating wills, trusts, health care directives, and powers of attorney, or updating existing documents. However, if the COVID-19 pandemic has taught us anything, it is that life is unpredictable and can change rapidly. None of us knows what the future holds; knowing you have current estate planning legal documents can provide valuable peace of mind for both you and your loved ones.
If you do not have estate planning documents in place today, or if you have outdated documents in a filing cabinet or safe somewhere, here are six reasons for creating or updating those documents.
1. You have children.
If you have minor children, it is important to document your wishes for who would care for them if you were to die prematurely and their other parent was unable to care for them. When you have minor children, you can name someone to serve as “Guardian” for your minor children in your will. You can also establish trust provisions in a will or in a separate revocable trust instrument, putting the framework in place so someone you trust to do so would be able to manage money for your children until they reached a specified age (or ages.) Without taking these steps, the court would need to appoint someone to manage any assets left for your children and those assets would likely be available to them at age 18. Planning gives you control over this scenario.
If you have an existing will or trust in place but add to your family through birth or adoption, it is important to make sure your current documents cover “afterborn” children, and that the provisions you initially created still reflect your wishes.
2. Your marital status has changed.
Your marital status may also be a reason to talk to an estate planning attorney. If you have a domestic partner but are not legally married to them, they do not have the same rights a spouse would have under Florida law if you were to die intestate (without a will.) Similarly, if you have existing estate planning documents but have gotten married or divorced since you created the documents originally, you should update them to reflect your current situation and wishes.
People in “blended” families should also talk to their estate planning attorney about whether it makes sense to use trusts to accomplish their goals. If you are in a second or subsequent marriage and want to plan for both your current spouse and descendants from your previous marriage, documenting your wishes legally is important. Doing so may also help mitigate the risk of potential estate litigation that can sometimes arise in such situations.
3. Your financial situation changes.
Has your career changed? Have your investments appreciated significantly? Have you inherited money or received a lump-sum settlement? Do you own a business? Have you purchased real estate in Florida or in another state?
If you answered “yes” to any of these questions, using a will or trust can enable you to create and leave the legacy you want to your loved ones and/or charitable beneficiaries, while being mindful of and planning for potential income tax, estate, gift, and generation-skipping transfer taxes that could otherwise result in “Uncle Sam” being an unnamed heir for your estate. Your attorney can help you create tailored planning documents designed to work within the current tax law framework to leverage available exemptions.
Your estate attorney can also help you understand how beneficiaries are taxed on various types of assets and structure your plan to minimize the tax impact on your loved ones. For example, if you have both individual and charitable beneficiaries, there may be tax advantages to leaving tax-qualified accounts like IRAs to charitable beneficiaries and naming individuals to inherit life insurance proceeds, which typically pass income-tax free.
4. Your relationships with loved ones have changed.
Sometimes, the reason to create or update your estate plan is because you want to control who will be in charge of various responsibilities, and who will inherit assets when you are gone.
Naming someone as your Personal Representative (executor), Trustee, Attorney-in-Fact under a Power of Attorney, Health Care Agent, or as Guardian for minor children, can be difficult. Most people don’t make such decisions lightly. When you know who you want in those roles, you can nominate them in your estate planning documents. However, the reality is that things can change over time; the person you named may have died or become disabled, or you may have simply changed your mind about who you want in those roles.
Similarly, your thoughts about who will inherit assets may have changed since you first created your estate plan, or a beneficiary may have special needs or other planning considerations. Your attorney can help you update documents and recommend beneficiary changes and other actions so your plan reflects your current wishes.
5. You don’t have power of attorney or health care directives in place.
While you likely think of a will or trust when you hear or read the words “estate plan,” the term covers both planning for what happens when you die and what happens if you become incapacitated and are unable to manage your own affairs or make your own health care decisions.
Without a valid power of attorney or health care directive in place, it can become much more difficult for family members or trusted friends to carry out your wishes for you. That’s true for spouses too; if you are married, your spouse does not automatically have authority to manage or access your individual financial accounts if you are alive but are unable to make decisions – nor does your spouse automatically have the right to speak for you regarding medical decisions.
Creating (or updating) documents designed to address your wishes during periods of lifetime incapacity can avoid the need for your loved ones to have to go to court to get authorization to carry out your wishes, should incapacity strike.
6. It has been more than five years since you reviewed your estate plan.
Finally, estate planning documents are not something you can create once and never look at again. A good practice is to review your documents every three-to-five years to make sure they are still meeting your needs. If the last time you looked at your estate plan was when you named Aunt Betty in your Will as Guardian for your toddler in the event of your death, and your toddler is now in her thirties, it’s probably past time to update your plan.
Even if you are fairly certain none of the previously-described changes have impacted your estate plan, Federal and state tax laws and estate/trust laws in Florida can – and do change periodically. Your estate planning attorney can help you evaluate whether your documents are designed to work optimally within the current tax and legal framework, and recommend updates as needed or appropriate based on your specific circumstances and goals.
Review Your Planning Needs with an Experienced Estate Planning Attorney
If you have been putting off creating a will, trust, or other estate planning documents, or if you created documents years ago but have not thought much about updating them, there is no time like the present to schedule a meeting with an estate planning attorney. Taking thoughtful, deliberate steps to create or update your estate plan now can help make it easier for your loved ones to carry out your wishes in the future, when they need to put your estate plan into action.
To learn more and to schedule a meeting with an experienced attorney, contact us today!