Which Updates Does Your Estate Plan Need?

If you have met with an estate planning lawyer before, you know that you will need to update your estate plan whenever you experience a major life event, such as your own divorce or retirement, the marriage of a close family member, or the birth of a grandchild.  2021 has been the year when everything and nothing happened, so even if there were no “qualifying life events” in your life this year, you should still review certain aspects of your estate plan before the end of the year.  You do not need to rewrite your will from scratch every year, but you should review your estate plan with your Clearwater estate planning lawyer before your out-of-town relatives so that you can feel reassured that the toughest conversations about your estate plan can wait until next year.

Making an Estate Plan and Checking It Twice

The good news is that you can start with the fun parts.  Look at your bank account balances and think about how much money you can afford to give as cash gifts.  The annual gift exclusion for 2021 is $15,000.  This means that you can give cash gifts of up to $15,000 per person to as many people as your finances will allow, within reason.  (The lifetime limit of tax-free cash gifts that a person can give is just over $5 million, but if you have that much money, you have a whole different set of estate planning worries.)  Decide how much money you want to give as cash gifts this year, so the recipients can pay down their debts, avoid borrowing more money for college, or build up their savings.

Beyond that, if you haven’t experienced a major life change such as a divorce, then you don’t have to think any more about the amounts of money in your estate plan.  Just think about the people you have chosen for certain roles, such as personal representative of your estate and healthcare surrogate.  See if your choices are still appropriate.  For example, you may have originally chosen your brother as the personal representative of your estate years ago, but you might want to choose a different personal representative if your wife and your brother’s wife have had a falling out.  Likewise, you might want to choose a member of the younger generation as your healthcare surrogate, if years ago you chose your spouse or sibling.  Likewise, you should change the payable on death (POD) beneficiaries, if you have chosen such beneficiaries.  If you divorced your spouse but your ex is still listed as the POD beneficiary on the account, then your ex-spouse gets the money from that account when you die; POD beneficiaries do not have to be related to you by blood or marriage.

If you make any changes, or even if you don’t, there is no rule saying that this Christmas must be the time when you talk to your family about personal representatives and POD beneficiaries.  You can just give your family the cash gifts and watch the recipients enjoy their prosperity while you enjoy saving money on taxes.

Contact an Attorney for Help

An estate planning attorney will not always push you to make major changes to your plans; your lawyer may also encourage you to stick with the plans you have already made.  Contact William Rambaum for help with your case.

cnbc.com/2021/12/07/its-essential-to-review-your-will-or-estate-plan-every-few-years.html