The Top Three New Year’s Resolutions For Legacy Planning
2024 Resolution #1:
Resolve To Review And Update Your Estate Plan This Year By Calling A Professional.
Let this be the one resolution that you complete especially because there are professionals like me who can assist you to make the process easier in protecting your legacy by reviewing and updating your estate plan. If you fail to review and update your Trust, then it may fail to achieve one of its primary objectives which is to avoid the cost and delays of the probate court process. If you fail to review and update your Power of Attorney or Healthcare Directive, then you may fail to achieve their primary objectives which are to avoid the cost and delays of the probate court process of a conservatorship proceeding if you are declared incapacitated. I assist clients in reviewing and updating their estate plan even if I was not the attorney who drafted the original documents. Sometimes the previous attorney has retired or sometimes the client has relocated. The burden is on my shoulders, if I update a document prepared by a previous attorney, I am on the hook as if I wrote the original myself.
2024 Resolution #2:
Resolve To Review Your Documents To Ensure That You Have A Complete Plan.
The first step in the review process is to ensure that you have all the legal documents necessary for a comprehensive estate plan. A Trust is recommended for clients whose estate assets exceed $100,000 or if they own real property. The documents required for a comprehensive estate plan include the Trust; a Last Will & Testament – Pourover Will; a Healthcare Directive, and a Power of Attorney. It is important to check first to make sure that all documents have been properly executed and notarized and that there are no missing pages. It is also important to check to see if all parties are referenced correctly so that they can be identified and contacted quickly. On more than one occasion, I have been hired to amend a Trust only to determine that the original Trust was never actually signed.
2024 Resolution #3:
Resolve To Review Your Trust To Determine If Changes Need To Be Made.
The next step in the review process is to determine if any changes need to be made to the original documents. A Trust Amendment is necessary when you have changed your mind about a beneficiary and or their gift amount. It is not a legal amendment when you cross something out and write something new in the margin. The most common example of when you have changed your mind about a beneficiary and or their gift amount is because you need to consider disinheriting a beneficiary. Disinheritance of a legal heir is considered because the beneficiary has a history of alcohol and/or drug abuse and their parent(s) cannot expose them to the risk of receiving large sums of cash. Some individuals consider disinheritance because the beneficiary has a disability and is receiving public assistance benefits and the benefits could be lost due to a large inheritance. I advise clients to consider protecting their inheritance with a Special Needs Trust instead of disinheriting them.
You must sign a legal, notarized amendment which specifically rewrites the trust provision. A Trust Amendment and update of an estate plan is necessary when you are naming a new nominee for financial and health matters. The most common example when you are naming a new nominee for financial and health matters is when a child has reached the age of majority and is now eligible to serve. When you are naming a new nominee for financial and health matters it results in an update of the estate plan due to the fact that you need to sign a Trust Amendment, rewriting the Successor Trustee provision of the Trust; a new Last Will & Testament – Pourover Will, rewriting the Executor nominee provision; a new Healthcare Directive, rewriting the Agent nominee provision; and a new Power of Attorney, rewriting the Agent for financial matters nominee provision.
The next step in the trust review process is to determine if any updates need to be made due to change in circumstances. To avoid probate, your real property and bank accounts need to be registered in the name of your Trust. I assist clients in this process by preparing the Trust Certification; the Trust Transfer Deed(s) for Real Property; and the Itemized Schedule of Trust Assets. The most common example of an update due to change in circumstances is the inheritance or purchase of real property. The Trust Transfer Deed(s) for Real Property must be recorded in the County where the real property is located. The new residence needs to be added to the Itemized Schedule of Trust Assets. Also, to avoid the probate court process, your bank accounts need to be registered in the name of your Trust. It is not sufficient to just add one of your beneficiaries on your account as a joint owner. If both joint tenants die, the account is frozen for 40 days and may be vulnerable for a probate if the dollar amount in the account exceeds the small estate amount which is currently $184,500.
I hope that this article has convinced you to resolve to review and update your estate plan to determine if any amendments or updates are needed. If you need legal guidance with reviewing, amending or updating your legacy documents, please call The Estate Planning Law Center at (209) 223-7625 to schedule a consultation (in person, via zoom or via telephone).
