Articles

December 31st, 2018

A Resolution for 2019 and Every Year: Reviewing Your Estate Plan

Posted in: Estates, Trusts & Probate    Tagged: Micah A. Bonaviri

Author: Micah A. Bonaviri

As we approach the holidays, make out way through the New Year and into Spring, many will be trying to keep our New Year’s resolutions on track. With this in mind, we suggest an additional resolution that is easy to keep and very important for ourselves and our loved ones.

Review Estate Documents

We recommend reviewing your existing estate planning documents on a regular basis. Whether you have a will, a trust (or both), powers of attorney or health care directive you need to ask yourself:

• We recommend reviewing your existing estate planning documents on a regular basis. Whether you have a will, a trust (or both), powers of attorney or health care directive you need to ask yourself:
• When was the last time I read these documents?
• Do these documents reflect my current goals?
• Have I allocated my assets to the right beneficiaries and under the appropriate terms? Have circumstances changed?
• Are those that I have “left in charge” of my affairs appropriate in light of current circumstances?

If you haven’t reviewed these documents in a few years, early in the first quarter of each year is a good time to revisit them.

Estate planning documents allow us to control when, and in what form, our children or other beneficiaries will receive their inheritance, and who is in charge of that inheritance.

• Are there beneficiaries with special needs, or other reasons to plan for the management of the inheritance for the recipient’s lifetime?
• Are there charitable endeavors that require your financial support?
• Are there potential needs for some asset protection?
• Have you given thought to how family heirlooms and jewelry can be passed fairly and without hard feelings?

Beneficiary Designations

When conducting your annual review, be sure to include beneficiary designations. Remember that any assets passing by beneficiary designation generally do not pass under your will.

• Do my current designations for my retirement funds (IRAs, 401(k), or 403(b) account balances) or life insurance proceeds reflect my current goals?
• Are my beneficiary designations coordinated with the terms of my other estate planning documents?
• Have I designated primary and contingent beneficiaries?

Don’t rely on what your memory tells you. Rather, review the actual designation form and, if you don’t have a copy, ask the custodian or trustee of the retirement fund or your life insurance advisor to send you the current one.

Tax Issues

As you may know, there have been significant changes in the federal estate and gift tax arenas in the last year or so. Current law allows an individual to transfer up to $11.18 million of wealth (adjusted annually for cost of living) during the course of his or her lifetime, or at death, before any federal estate or gift taxes must be paid. As a result, many of us may not need to incorporate significant tax planning into current estate planning documents. While that may be the case for federal tax purposes, both Maryland and the District of Columbia assess an estate tax.  In Maryland, the estate tax exemption amount is $4 million in 2018 (increasing to $5 million in 2019).  In the District of Columbia, the estate tax exemption amount is currently $5.6 million.  Virginia currently has no estate tax. Therefore, those living in Maryland and the District of Columbia should continue to include tax planning in the annual review process as these laws are always subject to change.

Conclusion

If you have not implemented an estate plan, or if you have one but have tucked it away and haven’t looked at it in several years, let this be a reminder that your estate plan is not immutable. You should review it on a regular basis to ensure it reflects your current personal or financial situation. We encourage you to include this as one of your New Year’s Resolutions. If you have any questions, please contact one of the attorneys in our estates and trusts department at 301-340-2020.

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