The Importance of Estate Plan Review
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Keeping your estate plan up to date is essential to ensuring that it reflects your goals and wishes

Once you’ve developed an estate plan, it can be tempting to put it on a shelf and forget about it. However, factors that affect your estate plan can change, and you may need to update your plan so it continues to match your goals and minimize taxes.

For example, your family structure may change. A new grandchild could mean adding a new beneficiary. Additionally, tax law can change. For instance the Tax Cut and Jobs Act changed federal estate taxes significantly.

For all these reasons, it is essential to review your estate plan at least annually. Consider:

  • Beneficiary designations
  • The titles of your assets
  • Status of any life insurance policies
  • Status of any trusts
  • Your timeframe to discuss the plan with your family

Tackling these issues can be difficult. “It’s such an uncomfortable topic; nobody wants to talk about their own mortality,” says Elizabeth Winter, Senior Vice President and Wealth Advisor for Regions Private Wealth Management. “But if you continually put off your estate plan review, you’re missing an opportunity to pass your assets the way you’d prefer.”

Here are some guidelines to get you started:

Beneficiary Designations

Many experts recommend regularly reviewing the beneficiary designations on investment accounts and insurance policies. A major reason for reviewing beneficiary designations on a regular basis is to account for changes in your family, such as a marriage, divorce, birth, or death. Assets such as retirement accounts, life insurance policies, and IRAs are guided by beneficiary designations — not by your will. Therefore, it is wise to review those designations annually or when your family structure changes.

Asset Titles

The concerns are similar when it comes to the title (the identification of the owner) of assets like bank accounts. The title determines how an asset or account gets passed along. If it’s titled “joint tenants with right of survivorship,” for example, it will pass to the joint owner. That title could create problems if it does not mesh with the overall estate plan.

“The beneficiary designations and titling of assets are critically important,” Winter says. It’s also helpful to maintain an easily accessible list of beneficiary designations and titles for your own records, she adds.

Life Insurance

Many individuals use life insurance trusts to keep the policies’ proceeds outside their taxable estates. While this is a valid estate planning technique, “you’ve got to make sure you have an administrator who understands trust rules and follows them,” Winter says. Asking an expert to annually review your trust can ensure it complies with current tax law and will continue to accomplish your objectives.

In addition, examine the value of the life insurance policies themselves. Coverage needs usually fluctuate: They increase when you start a family, and may moderate as children become self-sufficient adults.

Furthermore, the dramatic jumps in the estate tax exemption mean some policies purchased within irrevocable trusts with the goal of limiting exposure to the federal estate tax may no longer be necessary.

One caveat: Some states’ exemption amounts differ from the federal ones.

Trusts

Changes in estate planning laws make it essential to periodically analyze any trusts. For example, many estate plans written years ago directed trustees to allocate enough assets to a family trust to match the exemption amount, with the remaining assets funding a marital trust. This strategy made sense when the federal estate tax exemption amount was lower

However, because the estate tax exemption has increased significantly, this structure may mean that few or no assets pass to the marital trust that benefits the surviving spouse. Depending on the structure of the family trust, a surviving spouse could be left without assets or an income source if the trust is not updated to account for estate tax exemption changes.

Talking to Your Family

One of the most difficult estate planning decisions is determining when and how to involve your family in any planning discussions. While the timing varies for every family, opening a dialogue reduces the potential for future discord when your plan is implemented.

The team of experts at Regions Private Wealth Management can help you craft an estate plan that reflects your wishes and has the flexibility needed to remain effective as circumstances change. Your Regions Wealth Advisor can help build a team of advisors to guide you through the estate planning process and help you build the legacy you envision.

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This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.