When Should You Review The Estate Plan?

Most people after they have signed their Wills, Powers of Attorney, and Living Wills put them away and continue on with their lives…

Most people after they have signed their Wills, Powers of Attorney, and Living Wills put them away and continue on with their lives. Often a substantial amount of time passes before thought is given to reviewing the “Old Will” and other documents. The question is when should be you review your Will and other related documents? Here are some pointers:

When you signed your Will, did you provide for your minor children, typically with a trust, and now they have attained the age of majority and perhaps do not need a trust?

Has the marital status between you and your spouse changed? While divorce, in essence, revokes a Will, it does not change any other provisions and may not change all of your estate planning documents such as Powers of Attorney and Living Wills. They should be reviewed in the event of a divorce or separation.

Have your children married? Is there a reason that your estate should not pass to them outright?  Should there be a trust to protect your assets from creditors including future ex-spouses?

Has there been a change in your financial status or position? Have you inherited money or other assets that should pass down through the bloodline?

Have you recently retired?  If so, does your Will, Power of Attorney and Living Will and the people who you have appointed fit into your plan? Will they be able to carry out your wishes?

Is it appropriate that you move your assets into a “Medicaid Trust” so that you may eventually qualify for Medicaid?

Most people’s largest investment is their home. There are ways to protect the home from Medicaid; have you consulted a professional to see what can be done? There is a Medicaid lookback period.  How can you protect your home from a long lookback period?

Have your fiduciaries, your executors, trustees, attorneys in fact, health care agents, died or have become incapacitated or are no longer appropriate for serving your needs.

Have you planned for potential incompetency? As we age, we generally fail to recognize that we may become incapacitated. Institutions such as AARP, American Association for Geriatric Psychiatry, American Association for Long-Term Care Insurance, Centers for Disease Control and Prevention and others have compiled important statistics:

• Chance that a senior citizen will become physically or cognitively impaired in their lifetime: 2 in 3;
• Chance that a senior citizen will enter a nursing home: 1 in 3;
• Chance that a patient in a U.S nursing home is sedated or physically restrained: 1 in 2;
• Average cost to stay in a US nursing home for one year: $76,680;
• Average number of days which individuals that require long term care, receive it: 904;
• Percentage of older population with long term care needs who live at or near the poverty level: 40%;
• Percentage of total long term care hours that are provided by unpaid caregivers: 84%;
• Percentage of Americans over 60 who live with a younger relative: 6.3%;
• Percentage increase by 2040 in the number of elderlies requiring long term care that have no children: 50%.

With the prospect that a person may become incapacitated it is important, now more than ever, to give significant thought to the potential of either becoming disabled or incapacitated and to plan for it as part of your overall estate planning.  If disability or incapacity planning is not addressed, your true wishes may not be known or, even if known, not honored. In such event, a professional guardian may be appointed by a court to make important decisions for you, which may not be consistent with your intents.

Have you considered your Will which was drafted some time ago is appropriate under the current law?  In 2018, New Jersey eliminated the estate tax and therefore assets passed down through the bloodline are no longer subject to estate tax. On the other hand, assets passing to brothers, sisters and others may be subject to an inheritance tax from 11% to 16%.

Have you considered making gifts to reduce your estate should it be subject to federal taxation? The current federal exemption is $12,060,000 per individual which however will expire at the end of 2025 at which time it will revert to the level it was in 2017 plus adjustments for inflation which would bring it to about $6 to $7 million each.

Is one of your dependents unfortunately suffering from special needs? Have you considered a special needs trust so that that individual can qualify for governmental benefits?

All of these are important questions that need to be reviewed from time to time to make sure that your estate planning documents are current and express your wishes.

It might be surprising to you but more than 50% of individuals dying do not have Wills and therefore the estate must go through administration which requires the posting of a bond and a much more complicated probate process.

If you have questions, please contact us

We all lead busy lives and whatever free time we have we enjoy spending that time with ourselves or our loved ones. Nevertheless, it is important to make sure that your estate planning documents are current and express your current wishes. I would be pleased to review your current estate plan at no cost to see whether it needs to be updated. In addition, if you have any questions, please contact me, Frank Brunetti, at 201-896-4100.