Estate Planning: Don’t Set It and Forget It

Key Takeaways:

• Annual reviews of your estate planning documents are important to help ensure they still meet your goals.
• Reviewing your estate plan and other related documents can help avoid future pitfalls and costly mistakes.
• Remain cognizant of any changes to your family, financial or tax situation when conducting an annual review.

Introduction:

The ink has just dried on your newly created estate plan. After months or even years of discussions and careful consideration, you have finally done it: You have established your estate plan, cementing your legacy while accomplishing your goals. It is over and complete, right? Not so fast. While you have taken one of the biggest and most important steps toward accomplishing your goals with your estate plan, there are still some important tasks ahead to ensure the plan continues to support your goals.

“A simple review of your estate plan will yield dividends for years to come.”

Annual estate plan reviews

Below is an estate planning checklist to examine when conducting your review.

1. Positions of appointment: Review current executors/personal representatives, guardians, trustees, trust protectors and powers of attorney to see if any changes should be made. Additionally, look at any named successors, as well as the situations in which an appointed person may resign or be removed.
   
2. Review grantor status if applicable: If you have a grantor trust, an annual review is important to ensure you can or want to support the tax burden. Decide whether an asset swap would make sense for you. Swapping cash into the trust for appreciated assets could result in a tax benefit for your heirs.
3. Review age-specific distribution language: Age-specific distribution provisions are a way to strategically distribute trust assets to beneficiaries at certain ages. As your children and grandchildren become older, it may make sense to review any age-specific distribution provisions to determine if they are still the best course of action.
4. Review planned additions: Consider additional sources of funding for the trust such as annual gifts using your annual gift exclusion.
5. Review dispositive language: Reflect on whether the permissible reasons for distributions are too broad or too narrow.
6. Review state tax implications: Consider whether there have been any changes to the state’s estate tax or any other legislative changes that could impact your plan.
7. Review trust-owned insurance policies: Conduct a review of insurance policies to see if they are still suitable for your plan and performing as illustrated.
8. Review of intrafamily loans: Review loan terms and the duration of the loan. Consider whether the terms should be renegotiated.
9. Review of estate and generation skipping transfer tax exemptions: Review your unused exemption amounts to see if any additional funding should occur. Understand that the current exemption amounts are scheduled to sunset in 2026.
10. Powers of appointment: Review powers of appointment granted within the documents to see if they still make sense from a goals and tax perspective.

Summary

Your family and goals will change over time. Annual reviews of your estate planning documents could avoid future issues, lead to additional tax benefits and help ensure that your goals will be met in the future. A simple review of your estate plan will yield dividends for years to come. Get your estate planning documents reviewed by Comerica,  Contact us today. Annual reviews of your estate planning documents could help avoid future issues.

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