The Wealth Counselor
Is Your Client's Estate Plan Out of Date?
Client meetings need to include a review of the estate plan – does it still work as expected, is the trust funded, have beneficiary designations been completed, did any laws change, have family or finances changed, how old are the documents, and was there a move to a new state? Recognizing when an estate plan needs to be updated will lead to meaningful discussions about what keeps clients up at night.
Seven Reasons to Update an Estate Plan
# 1 - Change in Marital Status. Separation, marriage, and divorce all require major changes to an estate plan.
#2 - Change in Financial Status. Winning the Powerball will certainly change someone’s financial status, but so will selling a business, retiring, or receiving an inheritance. Money in motion (good or bad) may require changes to the client’s estate plan.
#3 - Birth or Death. The birth of a child or grandchild often leads to opening UTMA accounts, setting up 529 plans, and creating gifting trusts. The death of a beneficiary may require the addition of new beneficiaries and changes to beneficiary designations; the death of a family member or friend named as a successor trustee or other fiduciary may result in the need for a corporate trustee.
#4 - Changes in Lives of Beneficiaries or Fiduciaries. It is important to review if the manner in which a beneficiary is to receive an inheritance is still the most appropriate method. Similarly, it is important to review fiduciaries in light of new potential fiduciaries (e.g., minors becoming adults) or current fiduciaries who are no longer able or willing to serve.
#5 - Changes in Latitude. Moving to Washington from another state creates the need to evaluate the potential for estate taxes and the opportunity to reduce capital gains upon death. Purchasing a second home or investment property outside of the home state requires a discussion about how the property should be titled.
#6 – Changes in Estate and Business Planning Law. In the wake of the American Taxpayer Relief Act of 2012 (ATRA), some basic assumptions that shaped most estate plans—especially estate tax thresholds and the principle of portability—shifted significantly.
#7 – Windows of Opportunity in Economic and Market Cycles. The attractiveness of certain strategies are dependent upon economic or market conditions. For example, low interest rates raise the viability of strategies like Grantor Retained Annuity Trusts (GRATs) and premium-financed life insurance that might have previously seemed unattractive or even inappropriate.
Many of our clients have an Annual Maintenance Plan (AMP) as a way to provide a systematic approach to keeping their estate plan current. We encourage our AMP clients to include their financial advisors in the annual meeting.
Life moves quickly and procrastination can harm your clients and their loved ones. As always, we are available to answer questions and review estate plans that may be out of date. We do not charge for initial consultations.
This newsletter is intended to provide you with general information which may be of interest and of value to you. You should not construe any of this information as legal advice or my opinion as it may relate to specific circumstances.
Sound Estate Planning, PLLC • 152 3rd Ave. South, Ste. 107 • Edmonds, WA 98020 • (425) 967-7287