Have You Reviewed Your Will or Trust Lately?

 In Blog, Educational Issues

Your will and/or trust was prepared so that your assets will be distributed according to your wishes after your death.  These documents can also reduce estate, gift, and personal taxes for your beneficiaries.  However, certain events can cause these documents to become outdated and create family stress and unpleasant tax results.

Revised tax laws and life’s ever-changing circumstances make estate planning an ongoing process.   That’s why a periodic review of your will or trust is an essential part of estate planning.   Here is a partial list of occurrences that could cause your will or trust to be outdated:

  • Your marital status has changed
  • Your heir’s marital status has changed
  • You have relocated to a different state (different states have different requirements)
  • Your assets have changed significantly in value
  • You have sold or acquired a major asset(s)
  • There is a change in your personal representative or executor
  • You wish to change heirs or your heirs have additional children
  • Any of the accounts in your trust have merged or been bought out by another company.  If so, make sure the account name is still the name of your trust and not just your first and last name!
  • Estate laws have changed (and they do change regularly)

If you are single or your spouse is ill or can’t handle your bank accounts for some reason, you might think about adding your named executor on your main personal bank account.  When you pass away, they can immediately access that account to pay your funeral expenses and monthly bills if needed.  If not, it could take weeks or even months for him/her to gain access to your accounts.

Not everyone knows that even when you have a trust,  an original death certificate, a copy of the original will and a copy of the trust have to be submitted to the Probate Court for their approval.  You can’t just show up at the bank with a copy of the Will and/or Trust and get access to those accounts unless your name is also on the account.  The court will, then, provide the executor with a an official court document stating that he/she is the executor.  This takes several weeks because you first have to wait for the official death certificates.  Sometimes you also need your attorney to write a letter to the court that accompanies the paperwork for approval.  Most banking institutions will not release any funds until you have the letter from the Probate Court naming you as executor, provide them with an official death certificate, and fill out the paperwork that they require.  Additionally, if you don’t have a trust, your will has to be not only approved by Probate Court, but the court administers the will, and that usually takes months and can be very costly because they charge a percentage of the estate to do so.

If you can do it, make your burial plans in advance, and make them known to your family and your executor.  If at all possible, pay for all the expenses up front as well.  Some of the expenses include fees for a burial plot or cremation, cremation urn, headstone, service (in the funeral home and/or graveside), opening and closing the graveside.  Include this paperwork with all your “in case of my death” papers.  Funeral homes don’t wait for your accounts to be accessed for payment.  They want paid before the service and or burial.  If you choose not to plan ahead, you might just note this in your papers so that who ever is in charge after your death is aware of that and doesn’t keep looking for them.  If you have not made burial plans in advance, you might just write down your wishes so your family knows what you wanted them to do.

Are your named beneficiaries up to date on your insurance policies, IRA accounts, and pension plans?  For example, did you forget to remove your ex-spouse, or a deceased relative as your beneficiary?  If you recently married, in most states, your spouse becomes your first beneficiary for many types of accounts.  If you had your children down as beneficiary before you married, and want them to remain first beneficiaries, you should speak to your CPA and/or attorney about how your state laws affect that.

If you have not done so yet, pull all your important papers in case of your death together in one place, and make sure your heirs and executor know where they are.   There are booklets that you can use to list all of your accounts in one place which makes it easier for your heirs and executor to locate them.  They are usually provided free by local funeral homes when you do a burial plan consultation.

Do not put your original will or trust papers in a safety deposit box at the bank!  Your family and/or executor needs immediate access to those papers and can’t access them at the bank unless, again, their name is on the account.  Also, do not count on your attorney to keep those original documents either.  Papers get lost, old files get put into storage, offices close, and there’s no guarantee your beneficiaries can get them when they are needed. The best possible place might be a safe in your home as long as someone else has a key or your executor knows where your key is.  If not, put in with all your other “in case of my death” papers.  In fact, I’d put these 2 documents on top so they are located first.

You should never overlook or put off these issues, because if you pass on, it is too late to make changes.  And, if you don’t have a will or a trust (you don’t have to have both), NOW is the time do get one.  You never know when you might die, and you don’t want the courts to decide where your money goes and who will be guardians for your children.

If you have questions about how your changed circumstances may impact your estate taxes or if you have inherited money and need advice, give us a call at your convenience at 559.924.1225.  We’re always happy to help you out.

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