2022 New Year’s Healthy Habits For Estate Planning
As 2022 commences you may be searching for healthy habits that you can adopt to achieve a healthier and happier you. Don’t forget to consider that the best thing you can do to take care of yourself and put your house in order is to establish a healthy habit of reviewing and updating your estate plan.
Let this be the one resolution that you successfully complete especially because you can hire a professional who can assist you to make the process easier. This year marks my 20th year as a zealous advocate providing legal services for clients who find themselves in need of legal guidance.
You may purposely ignore my advice but then your estate plan may fail to achieve one of its primary objectives which is to avoid the cost and delays of the court process. A majority of my clients hire me because they want to make sure that their beneficiaries are provided for and protected. Many are surprised to find out that their investment in creating a legacy adds value to their lifetime. Not only does a Trust avoid the cost and delays of the probate court process following someone’s death, a Trust avoids the costly conservatorship process when someone is deemed incapacitated by their physician.
Healthy Habit No. 1 The first healthy habit in the estate plan 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. One time I reviewed an estate plan for the client and the client’s live-in girlfriend was referred to as his daughter. This would have been slightly embarrassing had it not been corrected. On more than one occasion, I have been hired to amend a Trust only to determine that the original Trust was never actually signed.
Healthy Habit No. 2 The second healthy habit in the estate plan 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 due to the fact that you need to consider disinheriting a beneficiary. Disinheritance is common, it has to be considered when a 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. Instead of disinheriting them, inheritance can be protected with a Special Needs Trust.
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 which is 18 years of age and is now “eligible” or old enough to serve as a legal representative. Another example is when you have married or divorced, and you need to name a new nominee as a resultof your change in marital status. 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 which rewrites the Successor Trustee provision of the Trust; a new Last Will & Testament – Pourover Will which rewrites the Executor nominee provision; a new Healthcare Directive which rewrites the Agent nominee provision; and a new Power of Attorney which rewrites the Agent nominee provision for financial matters.
Healthy Habit No. 3 The third healthy habit in the estate plan review process is to determine if any updates need to be made due to change in circumstances. In order 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, in order toavoid 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 $166,250.
I assist clients in updating their estate plan even if I am 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.
I hope that this article has convinced you to adopt these healthy habits to get your financial and legal affairs in order. If you need legal guidance with preparing, reviewing, amending or updating your Estate Plan, please call The Estate Planning Law Center at (209) 223-7625 to schedule a 30-minute consultation (in person, via zoom or via telephone).
