6 Parts Of Your Estate Plan You Should Review Now

Many people are taking this time at home during the COVID-19 crisis to update their estate plan. Here are six critical estate plan components you should focus on in light of the current pandemic.

Look at your power of attorney and health care proxy. Who is going to make important financial and medical decisions for you if you cannot make them for yourself? You need to ensure that you have named someone trustworthy and reliable, and don’t forget to name a back-up. If your current documents are outdated, execute fresh ones as the “stale” documents may be difficult to use if they are needed. Remember these documents are used if you are alive. When you die, the power of attorney and health care proxy are no longer valid. They die with you. That is when your will comes into play.

Evaluate your will. Confirm who you have named as the executor of your estate. This person will attend to your affairs after you pass, probate your will if necessary, and file income and estate tax returns. If you have minor children, you should name a guardian for them in the will. For both your executor and guardian, you should also name a back-up. Review the beneficiaries of your will. They should be clearly identified. If you have a trust that you create during your lifetime, in most instances, the trust will be the named beneficiary.

Review your trust. Typically, your trust benefits you while you are alive and can also be used to benefit others, such as a spouse and children. Identify who will receive the assets upon your death. Are you comfortable with your beneficiaries receiving the assets outright? Perhaps you want to provide an income string for them instead. Or, you may want to leave distributions to them at the discretion of an independent trustee. If your beneficiaries are young, consider holding any assets for them in trust until they are old enough to handle the money themselves. Look at who will serve as trustee after you’re gone. Consider whether this person will administer the trust based on your wishes. You may want to name a corporate trustee, such as a trust company or the trust department of a bank. Some people will name their attorney or accountant in this role.

Fund the trust now . Funding the trust now avoids probate of the assets on your death and allows the successor trustee to manage the assets for your benefit if you are ever incapacitated. Without it, court authority will be needed to access your assets. Petitioning the probate court can be a costly and time consuming endeavor. Funding the trust now saves money in the long run and makes administration easier for your successor trustee.

Update beneficiary designations. Review beneficiary designations on your life insurance policies, retirement accounts and any brokerage accounts that name a payable on death beneficiary. Remember if you have a joint asset like a joint bank account, that asset will pass to the surviving joint owner. Individuals sometimes undo their estate plan by incorrect beneficiary designations. They name someone as a beneficiary with “instructions” on what to do with the monies. That rarely works out well. Do not rely on someone to “do the right thing” by your loved ones.

Take advantage of estate tax opportunities. While the recent plunge in the value of brokerage accounts due to the pandemic is hard to stomach, it does present a gifting opportunity. The lower value of assets combined with the current estate tax exemption amount of $11,580,000 means that you can gift more assets while using less of your estate tax exemption amount. Also, low interest rates can be used for estate planning techniques like grantor retained annuity trusts and intra family loans to further take advantage of these gifting strategies.

Review your estate plan now while you have time, and set up a call with your attorney to discuss any questions you may have. Making important changes now will benefit you and your loved ones down the road.

This article was written by Christine Fletcher from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.