What to do when your Estate documents are old?

Estate Documents

Written by Vid Ponnapalli, MS, CFP®, EA

Vid Ponnapalli is a Fee-Only financial advisor providing Customized Financial Planning, Investment Management, and Tax Services for Busy Professionals in New Jersey, New York City, and across the country.

June 6, 2018

In recent times, I worked with quite a few clients who already have estate documents, albeit executed many years ago. Invariably, each of them asked me these very important questions – 1) What should we do if the last Will we executed is old?, 2) How often we need to revisit or review our will? While no one answer fits the unique needs of all, very generally speaking, my recommendation is – You need an estate attorney to look over your documents every 10 years or so.

That said, here are 7 points to consider to ensure your Estate Documents are up-to-date. Let’s discuss:


1. Is your will and powers of attorney for health care and finances current?

At a minimum, you will need these documents for every complete estate plan. With health-care power, you choose an agent to act on your behalf if you become unable to make your own decisions. With durable power for finances, you select an agent to act if you are incapacitated and can’t sign a tax return, make investment decisions, make gifts or handle other financial matters.

Make sure your health-care power addresses the current Health Insurance Portability and Accountability Act(a.k.a. HIPAA). This act governs what medical information doctors can release to someone other than the patient.


2. Are beneficiaries, executors, trustees, guardians or others named in your documents still accurate?

Start with looking at beneficiary designations on your Bank accounts, brokerage accounts, insurance policies, and retirement accounts – such as your 401(K)s and IRAs. Make sure these designations are in-line with your current goals.

If you filled out a brokerage account application (or any beneficiary designation), understand the firm’s policy when one beneficiary dies before the others. If you want the share of the assets to pass by bloodline – to the deceased’s children, for example – you may need to put in language specifying per stirpes (distribution of property when a beneficiary with children dies before the maker of the will). Otherwise, the remaining listed beneficiaries may simply divide the assets.

If you named a child on a bank account so the child can access or use the money in situations where you can’t act, be extra careful – You may accidentally end up distributing your assets against the wishes in your WIll. Understand that if you name your child as a joint owner on an account, the money passes to your child no matter what your will dictates.

With respect to people named in your Estate documents, ensure the executors, trustees, and guardians are still living, are still capable and willing to accept the role you assigned to them. For example, if you believe someone you recently found may fill a particular role better, you may want to revisit and amend the documents accordingly.

Lastly, review to see if updates are needed to addendums in your will that specify who gets what of your personal property. Often times, I noticed wills that mention addendums for personal property and the addendums don’t even exist.


3. Did you move to a different state since the execution of your estate documents?

State laws differ. So, if you have moved since you last executed your Estate documents, you may want to revisit your documents. Do seek out a local estate attorney to check any legal differences for planning between your old and new states.


4. Do you still need the Irrevocable Life Insurance Trust(a.k.a. ILIT)?

You may also want to see whether you need an irrevocable life insurance trust, a device once used to move assets, typically life insurance, out of a taxable estate. Now that thresholds are higher – individuals can leave $5.6 million and married couples $11.2 million tax-free (in 2018) – you may not need to move assets. Also, check when your life insurance expires. Consider how long to keep it if you think you might outlive the policy.


5. Have your children passed the ages specified in a children’s trust?

Does your current will propose a children’s trust – in which you designated money for such specific purposes as education, home down payments or weddings once the kids reach stipulated ages? If your estate documents call for a trust to give children access to money at certain ages after you die, you may be able to delete or alter that language if the kids are now older than the specified ages.


6. Do you have heirs with special needs?

An heir with special needs poses unique challenges in Estate Planning. Don’t assume typical estate documents help a special needs heir. Work with your financial advisor, who in turn can help you work with an attorney who specializes in this planning.


7. Do your heirs know where to find all your important information?

Do your heirs know where to find all your important information? Let someone know the password to the app where you keep all your passwords – you must remember digital assets now, too.


So, what do you think? Do you have all the necessary Estate Planning documents? And are they up-to-date as per your most recent wishes. If not, time to act is now. Best of luck!





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