Is your estate plan ready to go when you need it?
By Aaron R. Miller, Miller Law Firm, Collin County LIVING WELL Magazine
A common reaction people have after finishing their estate plan is “Phew, I’m glad that is done!” They then put it on the shelf, in a safe deposit box, or in a safe at home and promptly forget about it for the next 20 years. Unfortunately, that could lead to problems. Why? Because your estate plan was created with your lawyer (you didn’t try to do it yourself, did you?), and it handled your then-current family’s situation and addressed current laws. But the fact is, your plan may not work a year from now if your health changes, the law changes, your family changes, or your “stuff” changes. You cannot just “fire and forget,” you really need to make sure your plan stays up to date, so that it will work when you need it.
What could happen? Recently Margret walked into the office of an attorney whom she was referred to. Her mother had fallen and it looked as though mom would need help paying for the nursing home, which meant that Margret’s mother needed Medicaid. Margret (and the rest of the family) thought everything was taken care of, because Mom and Dad had created a trust over 20 years ago. They thought mom only needed to apply and she would get the benefit right away. Margret was surprised to find out that because of the trust, mom’s house, which would not have been a countable asset otherwise, was now countable and mom would need to take the house out of the trust in order to qualify for Medicaid.
Recently, Washington made permanent the estate tax limit of $5 million dollars–– meaning if a person has less than $5 million, then he or she does not have to worry about estate tax. This limit is adjusted for inflation, which means that this year, the limit for an individual is actually $5.25 million and the limit for a couple is $10.5 million. But not too long ago, the estate tax limit was much, much smaller. As a result, some people have provisions in their trust to protect against estate tax, but now those provisions are not only unnecessary––they could actually create problems upon the death of a spouse.
Sometimes updating your plan is as simple as changing the order of the agents on your power of attorney. Maybe your “first choice” has moved away or made some poor financial decisions, and it is time to make sure someone else will be in charge. Or you may have had second thoughts on whether you want to stay on life support if you are terminal or have an irreversible condition.
Perhaps you have had a new grandchild and want to make sure you’ve mentioned him or her in your estate plan. Or maybe you named guardians for your children who are now grown and have children of their own.
You may have purchased a new home or additional property and haven’t had a chance to put it in your trust yet. This could be a costly mistake for your beneficiaries, because they may have to go through probate, even though you have a trust. We have seen several cases of that recently.
The fact is an estate plan is not something you should put on your shelf, mark “done” on your to-do list, and then forget about it. And you want to be sure you hire an attorney who has a system in place so that at least every three years, the attorney touches base with you to make sure nothing has changed in your life or in the laws that would require an update.
If you need to update your estate plan or to learn more about putting your estate plan together, give us a call today at 214-292-4225.
