Want a FREE Mid-Year Estate Planning Checklist?

Just like that, 2018 is more than halfway gone! 

With summer in full swing, now is a great time to review your estate plan.

The kids may be starting a new school in the fall; you may have recently made an addition (by birth or marriage) or subtraction (by divorce or separation) to the family; or you may have substantially more or less assets than when you first executed your estate plan.

But do those life changes mean you need to make changes to your estate plan?

This post is designed to walk you through some topics that you should review and to help you consider whether you should change or supplement your estate plan.

So without further ado, here are 10 questions you should ask yourself for a mid-year estate planning review. (You can download a printable checklist by clicking the button below.)

1. Does your plan take new tax laws into account?

The Tax Cuts and Jobs Act dramatically affected our tax laws. Forbes even called it "the most comprehensive overhaul of the tax law in 31 years."

Included in that overhaul were major changes to individual income taxes, deductions, business taxes, and estate taxes — all of which can affect your estate plan. In other words, because of these tax changes, your estate plan might not protect your estate as well as it could, or it may not protect it at all!

If you have not spoken with an estate planning attorney (and a financial adviser, for that matter) since the new tax laws came into effect, we strongly recommend doing so.

2. Do you want to change fiduciaries?

Review your Trust, Will, Powers of Attorney, and Advance Directive for Health Care. All these documents name representatives (or "fiduciaries") to make decisions for you if you cannot make them yourself.

Do you still trust these people to serve your best interests? Have your children become adults and, if so, would your like to appoint as representatives or alternates?

Have any of your representatives encountered financial difficulties, and you are no longer confident in their ability to manage your estate?

If you have multiple children but only one is named as an executor/trustee, would you consider naming your other children as co-executors or co-trustees to avoid disputes over your estate plan?

3. Do you want to change beneficiaries?

Does your Will or Trust accurately reflect who you want to inherit your estate?

Remember: not only can you change who gets your assets, you can also change how they get it. 

If you want to give your estate to your 18-year-old daughter, you can provide that she gets a third at 21, another third at 30, and the rest at 35. Or you can authorize the trustee to match your daughter's W2 each year, up to a maximum annual amount.

You could also require your beneficiaries to submit to drug tests, to be in school, etc. There is a nearly infinite number of combinations for how you can distribute your estate.

It is also important to make sure assets with beneficiary designations (such as retirement accounts, joint tenancy ownership, insurance policies, etc.) match your estate plan.

Some people think that when they execute a Will or Trust, that document alone controls where their "stuff" will go. But that is not always the case.

Beneficiary designations can supersede or override the provisions of your estate plan.

Suppose your Trust says your son John to receive your entire estate, and you want to disinherit your other son, David. If your insurance policy still lists David as a beneficiary, he will still receive part of your estate.

Similarly, divorce does not automatically revoke designations where you have named your now-former spouse as beneficiary.

Therefore, it is crucial that you review your beneficiary designations with each institution or policy or asset to ensure that the beneficiaries listed are the people you want to receive those assets.

4. How old is your Durable Power of Attorney?

A Durable Power of Attorney is one of the most important estate planning documents you can have. After all, it is a document that affects you during your lifetime.

Your Durable Power of Attorney does not "go bad" and stays in effect unless you revoke it. However, we have had clients encounter difficulty when presenting a healthcare provider with a power of attorney that is more than a few years old.

From the healthcare provider's perspective, how do they know the power of attorney has not been revoked in the years since it was executed? How do they know there isn't a newer one that names a different representative?

To avoid trouble — and to make sure your documents work when you need them — we recommend updating your Durable Power(s) of Attorney every few years.

5. Is your trust fully funded?

One of the biggest differences between a Will and a Trust is that assets owned by a trust can avoid probate. So, you need to ask yourself an important question: 

Are my assets owned by my living trust?

Re-titling assets into the name of your trust — a process known as "funding" your trust — is what makes a trust effective. If your trust is not fully funded, your estate may still have to go through probate.

But be careful to make sure you have authority to transfer the asset in the first place.

Suppose, for example, that your car is owned by your family business. If you are not the sole manager and member of that business, you may not be able to dispose of the car through estate planning documents.

6. Are your assets titled properly?

Whether or not you have a trust, you should review title to all your assets. Any assets owned in joint tenancy, for example, may not go to the person you want to have them:

Let's say you own a house in joint tenancy with your brother, but your Will says you want your son to have it. When you die, the surviving joint tenant — your brother, not your son — would inherit your interest in the property.

7. Do you have a digital estate plan?

With the popularity of Facebook, e-mail, cryptocurrencies, and other websites, you should include digital assets in your estate plan to enable your representatives to access and/or dispose of your online accounts after your death.

Luckily for you, we have put together a quick-and-easy guide to help you create your own digital estate plan for FREE.

However, laws regarding the disposition of digital assets vary by state, so you should talk with a qualified estate planning attorney before making a digital estate plan.

8. Should you change investments?

While you are reviewing your estate planning documents, we suggest you also review your assets and investments — and your investment advisers.

If you are considering buying a home, you may want to consider moving funds from riskier investments. If you just had a child, it may be beneficial to divert assets into a 529 Plan to provide for a child or grandchild's education.

Investments can affect your estate plan. For instance, funding a 529 Plan through a charitable distribution from your IRA could reduce your income tax burden. Similarly, creating an irrevocable life insurance trust (ILIT) could reduce (or avoid) estate taxes.

Part of estate planning is determining who will inherit your assets when you die. Thus, you need to make sure there will be any assets for someone to inherit!

9. Where is your estate tax domicile?

Whether you owe an estate tax depends on your "domicile." Contrary to popular belief, your domicile is not necessarily the same place as your residence.

If you spend a substantial amount of time in more than one state, your domicile may not be where you think. States will take into account factors such as:

  • The length of time you were located in the state
  • Where your real estate was located
  • Where you were registered to vote
  • Where you paid taxes
  • Where you conducted most of your business
  • And many other factors

You want your domicile, for estate tax purposes, to be in a state such as Oklahoma that does not have a separate estate tax (although you may still have to pay the federal estate tax, if you are over the estate tax exemption amount).

If your domicile is uncertain, talk with a tax professional about steps you can take to help you avoid state-imposed estate taxes.

10. Do you want a free consultation?

Estate planning can be a complex and confusing subject.

You may review all of these topics and still be unsure whether you need to make any changes to your estate plan. Or, even if you don't think you need to make any changes, perhaps you want a second opinion just to make sure.

We can help with that.

To review your estate plan with qualified counsel, contact the Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation.

David M. Postic is an associate attorney at Postic & Bates, P.C. His practice includes estate planning, probate, real estate, adoption, business law, and litigation.

You can email David through our Contact Us page or by calling our office at (405) 691-5080.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]