With the COVID-19 pandemic now touching every corner of the globe, life has changed for almost everyone, in one way or another. “Social distancing” and face coverings are the norm, daily routines and work schedules have been altered sometimes permanently, and life looks different for nearly everyone. The constant stream of news reminds us daily that we’re vulnerable to critical and unpredictable changes in our health at any time. These rapid changes bring a renewed focus on the need to ensure that your estate plan is up to date.
Tax Planning Opportunities
Interest rates are at all-time lows, many asset values are depressed, and federal gift and estate tax exemptions are at an all-time high. these facts present an unexpected opportunity to implement or revise estate and tax planning strategies. For example, a grantor retained annuity trust, which transfers appreciation of assets over a term of years to a named beneficiary, is just one tool that can be particularly useful in this economy, and a review of your current financial and planning situation can help determine the best option for you.
Is your Will or Trust Current?
I encourage my estate planning clients to review their wills, trusts, and other estate planning vehicles at least every two years to ensure the plan is still applicable, both in terms of family dynamics and financial and economic circumstances. For example, you might consider whether any trust terms in your current plan are still applicable, or whether you may want to add individual beneficiaries or charities to your plan.
Review Powers of Attorney
If you become critically ill, having a Power of Attorney in place for asset management is crucial. If you need assistance with paying your bills or managing your finances, having a current Power of Attorney in place can avoid the need for a court supervised guardianship, which can be costly, time consuming, and places your financial situation in the public record. As I rule of thumb, I recommend updating Powers of Attorney at least every six years, to make sure banks and financial institutions will honor the document when it is needed.
Start the Conversation with Family Members
The fact that you have an estate plane at all may be news to your children or other close family members, and sharing this fact can open the door for a meaningful discussion. By putting an estate plan in place, you’ve developed goals for what you want to accomplish with your estate plan, both for you personally and for your family or other designated beneficiaries, and it is helpful to share these plans with children, grandchildren, and other family members.