10 Reasons to Update Your Estate Plan

1. Change in Marital Status.

   Separation, marriage and divorce all require major changes to an estate plan. Also, if you’re planning on getting married there could be some prenuptial planning opportunities to be considered.

 

2. Change in Financial Status.

   Winning the Powerball will certainly change someone’s financial status, but so will selling a business, retiring or receiving an inheritance. Money in motion may require changes to the estate plan, and overall financial plan.

 

3. Birth or Death.

   The birth of a child or grandchild often leads to opening UTMA (Uniform Transfer to Minors Act) accounts, setting up 529 plans and creating gifting trusts. The death of a beneficiary may require the addition of new beneficiaries and changes to beneficiary designations.  Also, the death of a family member or friend named as a successor trustee or other fiduciary may result in the need for a corporate trustee.

 

4. Changes in Lives of Beneficiaries or Fiduciaries. 

   Think about the following:

1. 1. Has a beneficiary developed a bad habit?
   2. Has a beneficiary gotten married or divorced, given birth or adopted?
   3. Has a child or grandchild become an adult and a good candidate to serve as a successor trustee or other fiduciary?
   4. Has a parent, sibling or friend become too old to serve as a successor trustee or other fiduciary?
   5. Has a former employee or estranged friend been named as a beneficiary or fiduciary?

5. Changes in Location. 

   Moving from one state to another warrants a review of the estate plan to ensure it will work as expected under the laws of the new state. And, purchasing a second home or investment property outside of the home state requires a discussion about how the property should be titled.

 

6. Changes in Estate and Business Planning Law.

   In the wake of the American Taxpayer Relief Act of 2012 (ATRA), some basic assumptions that shaped most estate plans—especially estate tax thresholds and the principle of portability—shifted significantly. Every estate plan drafted before 2013 needs a review and probably an overhaul.  Even more recently the Tax Cuts and Jobs Act of 2017 made even more changes.  It’s not uncommon for the rules to change and when they do a plan needs to be recrafted to adjust to them.

 

7. Innovations in Estate and Business Planning Approaches.We just demonstrated how laws change however things don’t stop there. Societal trends change. Court cases are decided. IRS rulings come down. And in response, thought leaders in estate planning, business planning and elder law innovate. Examples include lifetime QTIPs (qualified terminable interest property trusts), hybrid asset protection trusts, standalone retirement trusts and more. Even well-drafted plans from more than a few years ago miss these innovations.  When newer and better strategies are developed you should check to see if your current plan is still the best plan

 

8. Heightened Need for Asset Protection.Your advisors are not the only ones innovating. So are those who would like to use the law to raid your assets, whether justifiable or not. You can help ensure you’re the least attractive target for such threats through the use of proven asset protection strategies.  This could include holding assets in trusts, certain retirement accounts and annuities.

 

9. Innovations in Investment Tools and Strategies.With the rise of exchange traded funds (ETFs) and their distinctively tax-efficient design, as well as no-load variable annuities, it is possible today to avoid, defer and/or reduce taxes in ways that were previously much harder or expensive to do. These reopen the door to investment-related estate strategies that previously might have been avoided because of their tax inefficiency.

 

10. Changes in Your Health. Significant changes to your health could require you to revisit your estate plan.  The high cost of healthcare could drastically affect your assets and also, depending on the severity of a health condition, you may change your mind about end of life wishes previously laid out in your living will.  You may also want to adjust trust distributions according to your life expectancy.

 

Finally, we’ll add that simply the passing of time might be a good measuring stick for when to take a look at your estate plan.  As we often say to clients and friends, “life happens” and when it does it’s good to be assured that all the steps you took to be prepared for what life throws your way are still the best suited to handle your current environment.  If you’ve experienced any of the above instances or if you haven’t taken a look at your estate plan in a few years and think you should please don’t hesitate to reach out and ask us – that’s what we’re here for!

 

DISCLOSURES

 

 

Innova Wealth Partners, LLC (“Innova”) is a registered investment advisor. Information presented herein is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. 

 

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The tax information and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Innova does not provide legal or tax advice. Innova cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Innova makes no warranties with regard to such information or results obtained by its use. Innova disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.