In Part 2 of this blog series, let’s cover those regular estate planning to-do’s. By “regular”, we’re talking about those items that need to be reviewed, updated, and checked on from time to time. An annual check-in is ideal. Add it to your New Year resolutions list perhaps.

Once you have your estate plan groundwork set, you’re ready to move on to estate plan maintenance:

Review account beneficiaries: 

Check who you have listed as beneficiaries on your accounts. Review your retirement accounts (IRAs, 401(k)s, 403(b)s, and 457s), annuities, and life insurance policies. Take a look at who’s named as a beneficiary and what percentage of the account they would receive should something happen to you. Make any necessary changes or updates as you see fit.

Review status of asset ownership:

Joint ownership can be an inefficient method of passing assets at death and can produce unintended results. Adding a beneficiary as an owner of assets like real estate confers significant and sometimes irrevocable lifetime rights. Meaning? It exposes the donor to the co-owner’s liabilities and limits the donor’s ability to change his or her mind in the future. The most efficient and predictable plan is to fund those assets into a trust instead. Why? Read on.

Fund any revocable trusts:

Revocable trusts are set up so that assets can be transferred to beneficiaries outside of the probate process. However, that only works if the trust is funded. A lot of times people have trust documents drafted, but the funding step never happens. In order for a trust to serve its purpose, assets should be re-titled into the name of the trust. Again, review the ownership of your assets with regularity. If you purchase new real estate, for example, determine if you’d like the property to be put into the name of your trust, rather than in your name individually.

Transition the family business (early):

If you’re a business owner, the bulk of your net worth may be tied up in your business. You want to ensure the business’s future success by placing it into able hands. Look to family members who have been active in the business and who have been instrumental players thus far. The fragile nature of businesses requires a smooth transition from one generation to the next. Oftentimes, a seamless transition should gradually take place over time. Again, taking small steps each year to transfer responsibility and authority to your successors is a prudent way to go about it.

Annual gifting:

Depending on your net worth and life stage, you may be ready to begin distributing some of your assets to your heirs sooner rather than later. Annual gifting is a great way to go about it. Now, there are limits to the amount of funds or assets you can gift without tax implications, and the values change regularly. It’s important to check with your accountant and your financial advisor first before starting this process, and check with them again every year thereafter.

Update estate plan regularly:

Make sure to do a thorough review of your estate plan when there has been a change in your life circumstances, especially after a divorce. Same goes for if your beneficiaries have a change in their personal circumstances. Events such as the death or divorce of a child, or the illness, addiction or incapacitation of a beneficiary should be addressed as well.

Keep in mind that your personal financial situation is unique to you. While estate planning can have many complexities, getting it taken care of now will take a lot of stress off your shoulders. Knowing your assets will go where you’d like them to once you’re gone can go a long way to giving you the peace of mind to enjoy life to the fullest. If you’d like any additional guidance, reach out to us.