Spring Cleaning Your Estate Plan

Ah, springtime. The birds sing, the flowers bloom, and your estate plan is another year older. When was the last time you looked at your will or living trust? If you’re like most folks, it was the day your attorney explained it to you and you signed it. How long ago was that – five years, ten years, longer? Even if has only been two years, it’s a good time to review what your plan was designed to accomplish.

There have been substantial changes in both federal tax law and Nevada law which might result in your will or trust not operating the way you think it will. The much higher estate tax exclusion amount might result in the wrong trusts being funded at your death. Portability of your estate tax exclusion to your surviving spouse is now an option that didn’t exist before 2011.

Has something changed in your life since you prepared your estate plan? Have you gotten married, divorced, had children, had grandchildren? Is the person you selected as your successor Trustee, or agent under a power of attorney still the one that you would want to handle these critical tasks? Do you still want to leave your property to those currently listed in your trust or will? Have any of your beneficiaries had life changing events – marriage, divorce, children? Have any of your beneficiaries died?

Have you reviewed the beneficiary designations on your life insurance? Retirement plans? It’s not uncommon for people to not make changes in this regard following a divorce or death of a named beneficiary. There are many examples of life insurance or retirement plans going to ex-spouses, even though that was not the owner’s intent.

Has your financial situation changed – for better or worse? If for the better, now is a great time to consider making taxable gifts or transferring assets to your loved ones because of the increased gift exemption amount of $5 million per person (but only until the end of 2012). If for the worse, it might make sense to simplify your plan to reduce the burden on your beneficiaries to manage your estate – and to prevent unintended consequences.

In this season of renewal, it’s a good time to review and renew your estate plan