Is your estate plan up to date?
Give it this stress test to find out:
- 1. Do you have a will or a trust?
Without your own plan you are relying on the government to determine how your assets pass and to whom they pass. In addition to undesired results, this is the most costly and time consuming means of passing assets to loved ones.
- 2. Has your estate plan been reviewed in the last two years?
Even if there have been no family or financial changes since your plan was last reviewed, there have been significant tax law changes in recent years. As a result, an out-of-date estate plan may be worse than no estate plan at all.
- 3. Are all of your heirs over the age of 18?
At age 18 children become adults and can inherit property without restriction. Proper planning is crucial to prevent a child from squandering an inheritance, or worse, from causing harm to himself or herself.
- 4. Are you certain that your assets will not be subject to probate?
Assets owned as “joint owners with rights of survivorship,” assets owned in the name of a trust, and assets that pass by beneficiary designation (such as IRAs and life insurance) will normally avoid probate. Everything else is subject to probate. The government controls probate and it can be costly, is a public process, and typically requires a minimum of twelve (12) months from the date of death before distribution to loved ones can be made.
- 5. Do you have bank accounts or other assets titled jointly with someone else?
Holding assets jointly with someone other than a spouse is common, but has potentially devastating consequences. A creditor of a joint owner can take the entire asset to satisfy the creditor’s claim. A creditor would include a divorcing spouse, judgment creditor, or business creditor. Problems also occur if joint owners die in the wrong order.
- 6. Does your plan provide loved ones with asset protection, divorce protection, and lawsuit protection?
The most common means of providing for loved ones is with outright distributions. By doing so, the inheritance becomes subject to their creditors or any other “bad weather” in their life.
- 7. Is this your first marriage?
Second marriages present unique planning issues, particularly if both spouses have children from a prior marriage. Proper planning is critical to prevent undesired results and to avoid accidently disinheriting your children.
If you answered “No” to the above questions, or “Yes” to #5, you should contact Davis Law Group to schedule a no charge consultation so we can assist in updating your estate plan.