In my previous column, I discussed the importance of making sure your estate plan is properly funded. It is vital for your assets to be in the proper place and going the proper direction, so your estate plan works.
In this column, I will discuss another important topic: the need for updating and maintaining your estate plan.
Updating and maintaining an estate plan is often overlooked. It has been said that most estate plans are more than 19 years old. Like a new car that comes with a recommended maintenance schedule, a good estate plan must have regular reviews and updates to ensure it runs as you intend.
Often, a potential client will come to our office with an estate plan to review. Typically, the plan was drafted at a time when the client had young children, and the parents wanted to make sure guardians were in place to take care of the children. Now, 20 years later, the plan is out of date and does not reflect their current needs. Usually, the plan has not worked for many years.
I generally recommend that clients review their plan regularly — every one to three years depending on the circumstances. In particular, I recommend reviewing their power of attorney, health care directive and HIPAA (Health Insurance Portability and Accountability Act) release and authorization to make sure the proper people are in place to care for their needs if they become incapacitated.
For clients with young children, I recommend they review the guardians named for their children on a regular basis.
In addition to these periodic reviews, I also recommend making updates and revisions when major life events happen. These may include the birth of a child, when a child reaches adulthood, when a child or grandchild becomes part of the family business or farm operation, when the client is nearing retirement, and at the incapacity or death of a family member. At these times, it is important for clients to review the provisions of their estate plan to make sure it still covers their needs and the needs of their loved ones.
Another reason to review an estate plan is to address changes in the law. There are many areas of law that may affect an estate plan. Changes to corporate farming laws, agricultural homestead rules, income taxes, estate taxes, and the probate and trust law are often most relevant for our farm clients. I recommend that my clients work closely with their legal, tax and financial advisers on a regular basis to keep current on the legal changes.
Feel free to email your questions and comments to Miller Legal at [email protected].
Balzarini is an attorney at law with Miller Legal Strategic Planning Centers, P.A.