By:  Susan Marra

No one likes to consider his or her mortality or discuss the prospect of death or disability.  Thus, it is perhaps not surprising that many people fail to have an up-to-date estate plan in place at the time of their death.  Such failure frequently results in confusion, unintended consequences and unnecessary taxes and expenses and may precipitate suspicion and disagreements between loved ones left behind.  An estate plan allows you to make the right decisions while you are healthy and in a position to make informed choices.  All of us would prefer to be remembered fondly for our life and not for the financial disorder left after our death.  For these and other reasons, estate planning is important whether your estate is large or small.

At a minimum, all estate plans should include a will, a power of attorney and an advance directive for health care.  These documents, as well as other common estate planning devices, are discussed in a separate article titled “Understanding Estate Planning Documents.”

Estate planning is not only about distribution of assets upon your death.  Successor planning for your business and lifetime gifting should also be considered.  For many, their business represents their most significant asset. A shareholder agreement or operating agreement with buy-sell provisions will guide a smooth transition after your death and may form the basis for claiming valuation discounts to reduce gift and estate taxes.  A lifetime gift may benefit the gift recipient at a more meaningful time and allow the donor to observe the recipient’s ability to manage a future inheritance.  Lifetime gifting may also result in a lower taxable estate, including annual gifts under the annual exclusion amount. Other common gifting devices include charitable gifts of appreciated property and gifts of direct payment of the medical and/or educational expenses of others.

If you have prepared an estate plan, it is important that you review it periodically.  Our lives and those of our loved ones are constantly changing.  To assure that your estate plan continues to reflect your wishes, it must be revised to reflect your current life situation.  For example, you should consider re-examining your estate plan with your attorney if:

  • You change your mind about any element of your estate plan.
  • You get married, separated or divorced, enter a civil union, or if unmarried, have a new partner.
  • You or your children have a new baby, adopt a child, or have new stepchildren.
  • You inherit or otherwise acquire substantial assets or life insurance policies.
  • You move.
  • The form of ownership of your property changes, for example, a home held individually is now held with another person with a right of survivorship, or individual funds are used for purchase of a significant joint asset.
  • Your intended beneficiaries, legal representative, guardian, trustee or attorney-in-fact become incapacitated or die, or have a significant life or financial change.

Even if none of the above situations apply to you, it is important to re-examine your estate plan periodically since laws change.

When you have worked hard over a lifetime to build a circle of family and friends as well as an estate, you do not want your death to cause your loved ones unnecessary emotional distress or financial burden. As discussed in this article, estate planning allows you to manage and control the distribution of your assets during your lifetime and upon your death according to your goals and wishes. Since our lives and the laws affecting estate planning is constantly in flux, it is important to develop an estate plan with an experienced professional and examine it periodically.

This publication is intended for general information purposes only and does not constitute legal advice. The reader should consult legal counsel to determine how the law may apply to specific situations.