Is your estate plan old and outdated? You aren’t alone. Many times it takes a tragedy for a person to make the trip to the attorney’s office to get it done. But wait. You updated the estate plan one year ago. You figure, “OK, I’ve gotten that taken care of so now I don’t have to worry about it anymore, right?”

Wrong.

Think of an estate plan like a car. All cars need to be maintained or they might not get people to their destinations. A good estate plan needs to be maintained. This will help ensure the estate plan gets the job done.

We all know we are going to go sometime, but we don’t know exactly when. When it does happen, we want the proper planning to pass on hard-earned assets smoothly. In the meantime, things can change. Common changes are law changes and life changes.

Law changes can have a negative and positive effect. A law change that inadvertently has affected some estate plans in recent years is the law protecting medical privacy (commonly referred to as HIPAA or Health Insurance Portability and Accountability Act). This law, while protecting your privacy, can be a problem if you become incapacitated, and someone who is supposed to act on your behalf cannot get the necessary information. Then, he or she may not be able to act as you intended. The documents can be amended to reflect this change in the law in order to allow the named power of attorney to act when needed.

A positive change in recent years is how distributions from a retirement account are taxed.  This is commonly referred to as a “stretchout.” Many folks have not included any planning for what is usually the largest asset they own — their retirement accounts.  By stretching out the taxes on retirement accounts, beneficiaries can turn this into a powerful multigenerational account. This is a huge opportunity that many do not know about. It is such an opportunity that many folks are setting up special “retirement account trusts.”

Life changes should also be considered. Wishes may have changed or someone named as a beneficiary has passed away.  A simple amendment can many times take care of these changes so it reflects what you want.

Remember to get regular checkups on your estate plan. Many want to know how long they should wait to do this. Our recommendation is that it be done annually or at least every one to three years. Wait longer and risk not knowing about important changes that may have a negative impact on your plan.

Here are a couple points to consider for better maintenance:

1. Consider working with an attorney or law firm that focuses all or much of their practice on estate planning. All attorneys licensed to practice law can draft documents, but you may want someone who does it on a regular basis.

2. Many estate planning attorneys and law firms have an estate plan maintenance program. Like when you purchase a nice car, you can purchase a maintenance program for your estate plan to make sure it stays current.  These plans generally cover any changes related to law or life and many times valuable services like 24-hour access to health documents.

3. Always seek a qualified professional.

Happy spring cleaning.

For more information about The Retirement Guys, tune in every Saturday at noon on 1230 WCWA and every Sunday at 11 a.m. on 1370 WSPD or visit www.retirementguysradio.com.

This entry was posted on Friday, March 6th, 2009 at 12:00 am and is filed under Retirement Guys, Toledo Business Link.
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