Many things can change after drawing up your estate plans, such as the birth of a new grandchild, an upturn in the family business, change of residence, or the divorce, disability or death of a family member. Along with a sudden change in circumstances, there are other reasons to take a close look at your will, trusts and other estate plans.
Perhaps you have changed your mind about gifting a portion of your estate to a certain charity and would rather leave a legacy with a different organization. Changes to income, gift and estate tax laws – which could be considered by Congress later this year – could also prompt a change in the how you plan to convey your assets to your beneficiaries.
While it is important to review your estate plan every few years or after a significant change in your circumstances, simply updating your will, advance directives and trust documents may not be enough. You should also dig deeper and see how your assets are titled, and whether that ownership structure is in alignment with your estate plan.
Let’s say you spent $1,000’s to create a trust for the benefit of your children by your first marriage, while leaving a more-than-adequate amount for your current spouse. But when you die and those assets are held jointly with rights of survivorship; in this case all your assets would flow to your spouse, rather than funding your trust.
These types of financial problems can arise because different professionals focus on different parts of the planning process. In most cases, a trust and estates attorney will draw up the documents, an accountant will address the tax issues, and your banker, broker or financial advisor will manage the actual assets.
As a result, things may fall through the cracks, unless an outside financial professional coordinates the process. Few individuals, even successful business owners and executives, are familiar with the complex set of issues that can arise during the estate planning process. For instance, a joint brokerage account with “tenancy in common” ownership might be the most appropriate way to fund a trust for a child or grandchild with a chronic medical condition or disability. But changing how those assets are held might also result in a potential tax liability, which should be addressed.
If you are concerned about your trust and estate plans, consider engaging an outsourced financial professional that can assist with a review of your current documents and holdings. This is an excellent way for you to be sure that your estate plans will be effective in implementing your goals for your beneficiaries and leaving a positive legacy for future generations.