The Importance of Having Updated Estate Planning Documents


This article was featured in the Personal Finance section of El Nuevo Herald on Sunday, May 8, 2016. Please find the link to the published article at the bottom of this post.


By: Marianela Collado, Senior Financial Advisor at Tobias Financial Advisors

If at some point in your life, you took the time to have legal documents prepared to direct the care of your minor children and the disposition of your assets, you might be wondering if there is ever a reason to review those documents and update them. The answer is yes.

Some of the reasons why your estate planning documents may require changes are as follows:

Changes in your family

If you prepared your documents when the children were little, those documents are addressing issues that are no longer a concern if the children are now adults.

Maybe you named a friend or a family member as your personal representative and that person is no longer in your life. Your will or trust could be designed to leave assets to specific “named children” and you may have had a new or deceased child since then.

I’ve seen situations where people had named a spouse as a beneficiary of a retirement account then they get divorced and forget to change those designation forms and without intending they leave those benefits to an ex-spouse.

Change in relationships

The documents may reflect desires and wishes that may no longer apply. You may have directed that a special friend or family member receive specific gifts at your death and now you may no longer have a relationship with those people.

Changes in laws

The level of assets subject to estate taxes has increased significantly. You may have prepared documents when the exemptions were as low as $1,000,000 and may have done planning with this exemption level in mind, but now the estate tax exemption is $5,450,000 and is also portable.

This means that when one spouse passes, the surviving spouse may make an election to take any unused portion of the estate tax exemption. Now estate planning documents are being prepared to provide flexibility for the surviving spouse to do what is best for the family from both an estate and income tax perspective.

Change in financial situation

You may have prepared documents when you had relatively little assets but you’ve been successful and have accumulated a significant amount of wealth.

The planning for larger estates is much different. You may have had a simple will, but now may want to consider using trusts for specific types of assets.

Change in residency

Every state has different laws. Depending on the types of assets you own, especially real estate, it may be wise to consider updating your estate planning documents to be able to handle the assets appropriately based on the laws in your current state of residency.

We advise our clients to take a fresh look at their documents every 5 to 10 years or more frequently depending on the various changes affecting their family. Many attorneys offer a complementary review of existing documents and would provide recommendations for updates.

Your financial advisor would also be a good place to begin this process. They would be a good resource for both evaluating the need for an update and directing you to an attorney that would be better suited for your specific situation.

Link to article in El Nuevo Herald: https://www.elnuevoherald.com/noticias/finanzas/article77688237.html

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