During 2015, Estate Planning and Elder Law Services has been busy contacting our estate planning clients to offer a free 20-30 minute review of their estate plans. If you are one of our clients and have not received a phone call, you should be receiving one by the end of the year. If you are not one of our clients, but would like such a review, we would be happy to speak with you for the same 20-30 minutes. Free Consultation Form.
After this year, we will be offering a similar review once every 3 years on a rotating basis to our clients as a way of keeping up with life and asset changes.
Why is an Estate Plan Review Important?
Many, many people create an estate plan, stick it in a drawer, and say “Mission Accomplished.” That plan goes unreviewed for many years. And one day it is needed. But the family often finds out that it is out of date with current laws, and may in fact not accomplish what the client wanted. A periodic review is the best way to keep your plan current.
What Estate Planning Changes Should be Made
Estate planning changes fall into four broad categories: life events, changes in asset structure, federal tax law changes, and state legal changes affecting probate and trust law.
You can read generally on our website about Michigan Estate Planning Basics.
Life Event changes during a year to you or your family’s circumstances can be the most important changes. Consider the following scenarios:
- Since your estate plan was written, your children have grown, married, and had children, so one of your primary concerns is now the education of your grandchildren.
- Your estate plan was written when you were in your 40s. Now you are in your 60s, retired, with some of your primary assets being your retirement plans and 401k’s.
- Your parents needed to move into an assisted living center. You are the primary caretaker and are paying for part of their care at the center.
- One of the named executors or trustees has suffered from a disabling injury or have passed away.
- You sold a business.
- One of your children sold a business for millions and will not need your assets for their inheritance.
- One of your grandchildren is or becomes a person with special needs, requiring additional resources without jeopardizing government benefits.
- One of your children gets a divorce.
- Your spouse has become permanently disabled and you need to qualify for federal benefits to afford their care.
- Any one of these or dozens of other events can take place within one year, let alone 3 or 5 years.
Changes in asset structure also occur on an ongoing basis. For instance, have you ever:
- Taken ownership of a new asset as Joint Tenants with Right of Survivorship with one of your children primarily for convenience?
- Purchased an annuity contract or similar assets through a life insurance company where you have named a beneficiary? Was the beneficiary the same as in your estate plan?
- Purchased an ownership in a small business for retirement years or entered into an informal partnership arrangement with another person?
- Decided to change brokerage accounts from one firm to another without having the title changed to be the same as the former account?
- Sell any personal property which you specifically gave to one person in your Last Will and Testament?
We find that clients routinely engage in these sorts of financial changes in the course of the year. Sometimes, the way in which these changes are made affects their estate plans in ways they do not anticipate.
Changes in federal tax laws do not necessarily happen every year, but almost certainly every few years. The publicity is typically about the increases in assets that can pass free of federal estate taxation. Clients are lulled into complacency when they are below that threshold. However, consider some of these issues having nothing to do with Federal Estate Tax:
- Capital gains taxes upon the sale of a business or even your residence.
- Charitable contribution limits and the availability of retirement assets to be used to fund charitable bequests.
- Gift tax returns are due for every gift in excess of $14,000 (for 2016) regardless of the size of your estate.
- While the amount that can be passed free of federal estate tax is nearly $11 million, several states (though Michigan is not one) begin assessing an estate or inheritance tax on $1 million or even less (Indiana).
- Income taxation of retirement income can change at the federal level but many people are not aware upon retirement of how their state income taxation situation will change,
You can read generally on our website about Tax Planning.
Changes in state laws on wills and trusts may not occur every year but, when they occur, they might affect how your estate is handled. For instance, here are some changes that have occurred over the last few years:
- Not that many years ago, any joint bank account was presumed to automatically transfer on death to the surviving owner. However, recent changes in many states have eliminated that presumption. That may impact your accounts.
- Michigan now allows what is called a Trust Protector. This is a person, different from the trustee, who oversees the trustee and trust’s purpose. They have limited but useful powers and may be something you should consider.
We have just listed over 20 situations, any one of which call for a review of your estate plan. Many of these will most certainly occur within any given 3 year period — which is why we are providing our clients with a Tri-Annual Estate Review. We are confident you will find this helpful as your relationships go forward with us.
The goal of your estate plan is simple: provide for your protection and that of your family; to address your and their needs and wants in a practical, affordable plan. That is our goal too. You shouldn’t have to navigate this unfamiliar and emotional territory alone. That is why Estate Planning and Elder Law Services of Northville and Brighton, Michigan can be your trusted partner.