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Keeping Your Estate Plan Current

March 02, 2012 | Comments: 0 | Views: 200

The biggest mistake that people make in regards to their estate plan is that once they have completed it they don't look at it again. An estate plan should never be thought of as permanent. Life changes, and so should your estate. With these changes, your conditions and desires will change as well. An estate plan should be reviewed at least every two to three years to keep it current with the important changes in your life.

If something major happens, your plan should be reviewed immediately. Examples of major life changes would be: a birth, a death, a marriage, a divorce, the disability of you or a beneficiary, a large increase or decrease in the net worth of you or a beneficiary (especially a guardian,executor, or a trustee), a substantial change in the type of your assets, the purchase or sale of a business, a change of residence to another state, change in tax law, change in health, retirement, and inheritance.

If you have young children the most important aspect in your estate plan should be the guardianship of them should both you and your spouse die. If you don't specify a guardian then the courts will pick one for you. Make sure you ask the guardian and don't just assume they will take on this responsibility. Also, consider setting up a trust for your children to ensure they are cared for. You can also make your children the beneficiaries of life insurance policies or give them joint ownership of property. All will provide monetary care for them. With adult children, you should replace a guardian and trust with power of attorney or executor if you choose.

A common misconception is that your spouse is automatically considered the executor of your estate. This is not true. You will have to assign your spouse as the executor in your plan. If you get a divorce, you will need to redo your estate plan. Look at the durable power of attorney, healthcare proxy, and beneficiary designations. See what needs to be updated. This is also true if you remarry or if there is a death of a spouse. It is good to make sure you have the correct beneficiary on your retirement plans and insurance policies.

Something that is good to be aware of is to know whether your estate exceeds your state's threshold. If it does, an estate tax may be owed upon your death. Consider a trust that facilitates sheltering these assets from tax. You can talk to an Estate Planning Attorney for advice. It will save a lot of time and money. Also, if you move to another state you will want to update your plan. All states are different. State laws dictate what estate planning documents need to included, and how they need to be signed. One missing signature or one wrong provision could make your estate invalid.

If you purchase a business, make sure your estate plan is structured to deal with the business if you become disabled or die. You should have a business exit plan. On the other hand, if you sell a business your plan should be constructed now that you don't own a business. Make sure sale proceeds are titled in the name of your Revocable Trust, and determine if your estate is no longer or has become taxable.

The main reasons that people put off making an estate plan are: they think they are too young, they are healthy, they can't afford it, fear of death, or indecisive. If the thought of creating a plan is overwhelming, start small. Create a list of your property. See how it is titled, what the fair market value is, and the amount of debt against it. Also, list life insurance policies, retirement plans, and their beneficiaries. Once it's set up, review it routinely to make sure it still meets your goals. Also, monitor the changes in lives of your beneficiaries to determine if it will affect your goals or structure of your estate plan.

We are an estate planning law office in Snohomish, WA. Receive a free consultation on your first visit.

Source: EzineArticles
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