Just having an estate plan is a rarity in today’s world. That being said, it can be easy to forget that designing and implementing an estate plan is only the first step. As a series of documents that serve to designate beneficiaries and distribute your assets should you die or become incapacitated, an estate plan should grow and change alongside your family. Major events such as divorce, marriage, or child birth are not the only times you should review your plan, however. Below are 4 estate planning improvements you might consider right now.
1. Get Life Insurance
If you continue to work and support loved ones with your income, now is the time to get life insurance. After all, the primary purpose of life insurance is to protect dependents against the event of an individual’s untimely death. Even in retirement, life insurance can be critical if one member of a partnership generates most of the household income through Social Security payments, part-time work, a pension, or other sources.
Additionally, life insurance can act as a tax-free means of passing assets to the next generation. If your estate planning goals include passing a legacy to later generations, life insurance can be a valuable tool.
2. Skip Probate with a Trust
If your estate plan serves to protect significant assets, having a trust in place can be essential. Trusts come in two main forms: revocable and irrevocable. For most of us, the former is all we’ll need.
A revocable trust is funded with your assets. You continue to have access to, manage, and control these assets during your lifetime, and, at your death, the assets pass to beneficiaries without your estate having to navigate probate court—a burdensome and stressful process that can become unexpectedly expensive.
Irrevocable trust planning can go beyond relieving administrative and probate burdens. When planning issues include asset protection, long-term care benefits qualification, or estate tax management, some form of irrevocable trust may provide part of the answer. Not all irrevocable trusts require complex income tax treatment or even that the family give up control of the assets. Speak to an experienced estate planning attorney to discover if irrevocable trust planning should be part of your plan.
3. Be Charitable
For many, the sign of true wellbeing is the ability to take care of others alongside ourselves. Having free time to spend with loved ones is one thing, but having the resources to support causes dear to the heart is a whole other thing. There are a range of mechanisms that allow you to build charitable giving into your estate plan. These include outright gifts, a charitable remainder annuity trust (CRAT), or a CRAT set up at death achieved by passing on an IRA. No option is better than the others, but depends entirely on your personal estate planning goals.
4. Review Beneficiary Designations Regularly
Many assets, including those held in life insurance contracts, 401(k)s, and IRAs, can be passed directly on to loved ones…without the intervention of probate, as long as beneficiary designations are in place. In order to ensure your wishes are met, and that surviving loved ones need not enter into nasty family squabbles, it is crucial that these designations be kept up to date, especially when the family fabric changes or grows.
Because family circumstances and laws can change in ways that cause unexpected consequences to your planning, it is wise to arrange a periodic review with your financial advisor and estate planning attorney. We recommend annual reviews so necessary changes to your plan can be made before problems arise.
Contact Attorney James M. Miskell, P.C.
At the Estate Planning Law Group of Georgia, attorney James Miskell and his team are ready and available to answer your questions about estate planning—whether you need to create an estate plan, or just need to review or update an existing plan. Contact us today to schedule an appointment, or to learn more about our free workshops.