Time to Update Your Estate Plan?

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I am Dina Megretskaia, an advisor in Modera’s Boston office and a member of our Financial Planning Committee. I’m coming to you from my apartment rather than the office due to the physical distancing. We’re all having to undertake as part of managing the pandemic that said we all I think are looking for ways to stay connected. And today I wanted to address a question that might be on your mind. Namely is now the time to update my estate planning documents, or is it time to create an initial estate plan, regardless of the complexity of your financial picture, it’s important to have an estate plan in place. If you have minor children, your will lay out who you’d like to be their guardian, should something happen to you. And unfortunately we all can face a situation where due to illness, we’re not in the position to make decisions about our own medical care.

And so your healthcare power of attorney proxy living well, this varies by state we’ll lay out who you’d like to make those medical decisions on your behalf, including what treatments you do or do not want. Should you have a terminal condition or have permanent in capacity for financial and tax planning reasons, the right estate plan for you could include revocable trust, which allows for privacy and potential cost savings as compared to transferring assets via your will, which requires going through probate and irrevocable trust allows you to transfer assets and their future growth out of your estate for potential tax savings and your contract assets, which includes your IRA, 401(k) and life insurance is governed by what’s in the beneficiary designations. So it’s important that those beneficiaries are aligned with your overall estate plan.

Best reason to make an adjustment to your state planning documents is due to the passage of time or other changes. So if you have moved to a different state, if you have a change in marital status, a new dependent, or your relationship with somebody listed in your estate plan has evolved. Whether that’s a beneficiary or somebody with a different role, and maybe time to take a look at those documents. If you have trusts set up for your kids or your grand kids, you may want to look at those provisions that provide protection to those beneficiaries against creditors against the bad marriage or even themselves. Lastly, as your net worth evolves and federal and state estate tax laws change, it can be worthwhile to revisit the plan and make sure it makes sense. I would encourage you to talk with your Modera advisor and your attorney collectively. We can determine whether it’s prudent to make an adjustment to your estate plan. And if you don’t have an attorney, we at Modera would be happy to provide a recommendation of someone to work with.