Although likely not one of the most exciting New Year’s resolutions one can make, potentially one of the most important is to address your estate plan. This is not only a great way to kick off a new year for those with no plan in place but equally important for those who have done some planning to review and, if necessary, update that plan.
When many people hear the term “estate plan,” they often feel that it represents something more than they need because their life, assets, and personal situation are “simple.” However, no matter how complex or straightforward, or the amount or value of your assets, everyone should have a “plan,” even if it consists of only the most essential documents. In addition, even if you have a “plan” in place, whether done a few years or many years ago, remember that estate planning is an ongoing, life-long process. It requires periodic updating for changes in family situations, assets, and law changes (particularly estate tax laws).
For example, several years ago, Ohio enacted a significant overhaul of its General Power of Attorney statute (i.e., financial powers of attorney). Although existing, validly executed powers of attorney under the previous rules are grandfathered, we see an increasing number of clients encountering difficulties attempting to use those documents drafted under the prior statute when dealing with third parties (banks, brokers, insurance companies, etc.). Accordingly, even if an updated review does not need to change provisions of existing wills, trusts, beneficiary designations, etc., we are always looking to update General Powers of Attorney to conform to current law.
Another typical example of the need for regular updating is the number of times we have done estate plans for young couples with young children that require the designation of guardians for those children if those parents pass away unexpectedly. However, “life” gets in the way, and they don’t get around to an update until many years later, when the children are teenagers. You would be surprised at the number of those update meetings in which the parents do not recall who they named as guardians many years prior. A number of them that are horrified when they find out (and want to make a change before they even leave the office).
Also, remember that an estate plan involves not only the handling of your affairs and the disposition of your assets in the event you pass away. It is equally important for dealing with an unexpected disability event to have a General Power of Attorney, Health Care Power of Attorney, and Living Will in place. In fact, in many situations, a “plan” need only consist of those documents along with a Last Will and Testament and appropriate beneficiary designations, particularly for assets such as life insurance and retirement plans/IRA’s.
Another critical part of an estate plan is the implementation of one or more trusts. Clients often ask, “Do I need a trust?” but that question is not the best starting point. There are many different types of trusts designed to accomplish different goals and results. Accordingly, the best approach is to explore what you are trying to achieve with your estate plan, which enables us to discuss whether and what type of trust might be appropriate.
Although most people (understandably) don’t view implementing and updating their estate plan in the same vein as all those familiar resolutions which could improve your happiness and health, doing so should carry equal importance because of the significant burden it will lift from your family and loved ones in the event of a death or disability. Carlile Patchen & Murphy has a broad, exceptionally experienced team ready to help you check this resolution off your list, so don’t put off making that call or sending that email. Happy New Year, and best wishes for success with all of your 2022 resolutions.