A properly drafted comprehensive estate plan is an important financial tool that can do many things. First and foremost, it provides a framework for the distribution of your estate (i.e., who gets what, when, and under what conditions, if any).
Additionally, an estate plan can help with:
- maintaining privacy during the settlement of your estate
- it can protect assets
- it can help to satisfy philanthropic goals, and
- it can also minimize potentially significant estate tax and transfer costs.
Other documents involved in the estate planning process, such as durable power of attorney agreements, power of attorney for healthcare and healthcare directives will help prepare for the management of your financial affairs and healthcare when you can no longer manage them yourself.
The good news is many folks do the right thing and go through the estate planning process. The bad news is that after the process is complete, they then put the plan away and forget about it. As we all know, time brings about change. Family dynamics and situations change, assets change, philosophies change, and yes, believe it or not, even tax laws change (stay tuned…there may be a tax law change coming very soon). Any one or all of these changes may result in drastic alterations to your distribution goals, your overall tax planning strategy, as well as the selection of executors, guardians, trustees, and attorneys-in-fact.
Sadly, no matter how out-of-sync an estate plan is with your wishes, upon your incapacitation or death, the last set of documents that you’ve executed will likely rule. There are countless horror stories of this situation. Therefore, you should make it a point to review your plan with your estate attorney or financial advisor periodically to make sure your plan stays updated and current with all tax laws or legal changes, as well as up to date with any major events in your life (birth, death, marriage, divorce, etc.).
Bottom line is this – now is the time to take your estate plan out, dust it off, and review it to make sure that it does in fact do what you want it to do and by whom you want to do it.
Managing Director – Financial Planning