Into Action

Question:  

Hurricane Ian motivated me to update my estate plan. What suggestions and guidelines do you have? 

Answer:

It’s recommended to review estate plans at least once a year to identify any changes that may impact your plan. Estate planning can be an uncomfortable topic, but not having a plan or one that is out of date can leave your family and your legacy in a difficult situation. Life events including untimely death, accident, dementia, or injury could leave your loved ones confused and worried. An outdated plan, or not having one at all is a disservice to you and those you care about. 

The essential items for a comprehensive estate plan are as follows: 

• Will: necessary to document the method to transfer assets upon your death.

• Revocable Living Trust: agreement providing various benefits, including management of financial affairs in the event of incapacity or death. At the grantor’s death, the trust can be used to efficiently transfer assets avoiding the probate process. 

• Durable Power of Attorney: addresses financial affairs and medical decisions if you are incapacitated and unable to transact business or make medical decisions. 

• A Living Will: for end-of-life decisions allowing you to make these decisions for yourself in the event you’re not able to express your wishes. This documents your instructions for your physician and other healthcare providers for circumstances under which you want life-sustaining treatment provided, withheld, or withdrawn. 

Ideally, the wisest choice for this role of personal representative, executor and trustee is one that has the right combination of time, temperament, and tenure to carry out the responsibilities. If your assets are complex, administering your trust may take a significant amount of time, knowledge, energy, and commitment. Someone in another state may find it difficult to manage your affairs from afar. The best choice may be an independent corporate trustee, like Raymond James Trust, which is highly skilled at dealing with the intricacies of estate tax, trust, and investment strategies. Naming a reputable trust company as the trustee simplifies technical concerns, eliminates emotional issues often involved with family or friends, and ensures that your wishes will be fulfilled exactly as they’re spelled out in the trust. An independent trust company is closely regulated, audited and backed by the capital requirements set by its regulators. 

Once an estate plan is created, the work isn’t over. Your plan reflects this moment in time and needs to be revised to identify and reflect any changes that will impact the plan intentions to include family, personal interests, wealth, and changes in tax law. Making changes without professional assistance may have unintended consequences. Ask yourself these questions with respect to family and finances - have any of the following occurred in the past year? 

• Has income grown or contracted? 

• Do you want to leave funds to family and/or charities, and if so, how much to each? 

• Has anyone passed away, divorced, married, had more children or grandchildren? 

• Has a loved-one fell ill and developed special needs? 

• Is your wealth concentrated in real estate and investments? 

• How are assets titled? 

• Have your overall wishes changed in the past year? 

• What is the ability, availability, and willingness of my personal representative, trustee, and executor to serve in this role? 

• Have there been any changes to tax law? 

Changes in law and tax structures can quickly make an estate plan out of date. As of today, Congress has set the maximum estate tax rate at 40% and increased each person’s lifetime exemption amount to $5.49 million (indexed for inflation) and $10.98 million for spouses. Congress included “portability” allowing a deceased spouse’s estate to elect to transfer any unused exemption amount to the surviving spouse. 

Once your plan is completed, its time to communicate the information with the fiduciaries you’ve selected to carry out your plan. They should know they’ve been named, have a way to access pertinent documents, have contact information for your estate planning attorney, CERTIFIED FINANCIAL PLANNER™ Professional, CPA, and other key players in your plan, including your physician. Let your fiduciary know where to find contact information for loved ones or charitable organizations included in your estate plan. 

You’ve worked hard to get to where you are today; an estate plan done with careful attention to detail, collaborative expertise of professionals and regular reviews can provide a great deal of comfort to you and those you love. Don’t procrastinate and risk having your wishes and wealth unprotected. Stay focused and plan accordingly.