A common misperception of estate planning clients is that estate planning is a “once-and-done” proposition.
The reality is, once you overcome the initial inertia and create an estate plan, every estate planning attorney will recommend you review your estate plan every few years to consider whether the plan still makes sense for you. Have assets changed? What about your family? Do you still trust the same individuals to make medical or legal decisions for you if you are incapacitated? What about the guardian for your kids if you can no longer parent?
As we think about BDBF clients, we see patterns of what clients are commonly updating as they age. What follows is a decade-by-decade guide of things that likely would be considered.
Your 30s
Forget an update – it’s time to make sure you have a plan! Even if you don’t think you have “an estate”, you do need a few core documents to plan for incapacity or death and make sure your family is protected. At a minimum, make sure you have an Advance Medical Directive, a Financial Power of Attorney, and a Last Will and Testament. The Advance Medical Directive appoints a “Health Care Surrogate” to make medical decisions for you if you are incapacitated. The Financial Power of Attorney appoints an “Agent” to represent your legal and financial interests if you are incapacitated. Your Will governs the disposition of assets which you own in your sole name and which do not have a designated beneficiary. And perhaps most importantly, if you have children, your Will can nominate a guardian for your children if you are unable to parent.
Your 40s
As we age, so do our parents. In an initial estate plan developed in our 20s or 30s, it is not unusual to include our parents as medical or legal decision-makers for us in the event of our incapacity. It is not unusual to nominate our parents as guardians for our children. But as our parents age, are they objectively still equipped to handle these roles? More pointedly, could your parent reasonably be expected to become the guardian of a teenager? The most common updates for clients in their 40s are to remove parents from substantive roles in estate plans and replace them with siblings or other trusted individuals.
Your 50s
You’re in the “back nine” of your professional career. Are you planning for retirement? What about planning to support an adult child just out of college as they begin their professional career? This is a great time to engage a financial planner. A financial planner does far more than pick stocks. A truly valuable financial planner can help you budget for retirement, run scenarios to figure out when you’ll actually be able to retire, and can help make sure that you actually enjoy retirement by budgeting in that vacation home or more frequent luxury travel. Your estate planning attorney can assist with referrals to a trusted financial planner, and often the estate attorney and financial planner will work in consultation.
Your 60s
In your 40s, you thought about updating your estate plan to remove your aging parents as decision-makers and as guardians for your teenage kids. Now, your kids are in their 20s and 30s! This is a time when clients regularly consider updating their estate plan to include now-adult children in various decision-making or fiduciary roles throughout their documents.
Your 60s and 70s
Do you have a living trust? If not, now is a good time to consider one. You likely have a clearer picture of your assets and long-term place of domicile. Creating a living trust and working with your ancillary professionals (such as a financial planner) to properly fund the trust can go a very long way to making sure that the ultimate inheritance of your assets will be streamlined and efficient.
Now is also a time to review estate tax laws relative to your holdings. Is now a time to make gifts or contributions to irrevocable trusts to reduce exposure to estate tax? This is also something worth discussing with your attorney, financial planner, and/or accountant.
Your 80s (and beyond)
Now is really the time to objectively consider how much you rely upon your children or others for financial assistance. If you have a trust and you are the sole trustee with a child waiting in the wings as a successor trustee, perhaps it makes sense to bring your child in as a co-trustee now. This would ensure uninterrupted ease of access to your trust assets in the event of your death or incapacity without having to maneuver your child’s ascension from successor trustee to sole trustee. Perhaps if you have a financial power of attorney that only takes effect in the event of your incapacity (a “springing power of attorney”), it makes sense to make your power of attorney effective immediately.
Take heart – if updates are in order, often they would not require the creation of an entirely new estate plan. It can certainly be possible to work within the confines of an existing estate plan to more cost-efficiently tackle the updates that life requires.
How can we help you update your estate plan as the years go by? Contact Jeremy Rachlin or Liz Farley at (301) 656-1177 to schedule a review appointment.
