People tend to make New Year’s resolutions when the end of the year arrives. In some cases, they will resolve to lose weight, begin an exercise program, or quit smoking. Self-improvement commitments are common, and there are those that vow to take care of neglected responsibilities.
Estate Planning Preparedness
Just 32.9 percent of American adults have estate plans in place in 2021 according to a survey that was conducted by Caring.com early in the year. This is a nine percent reduction from the figure that was in place in 2017, so the numbers are trending the wrong direction.
You may not be surprised to hear that a low percentage of young adults have estate plans in place, but 56 percent of people that are 55 and older do not have wills or trusts.
Estate planning is an absolute must when you are approaching senior citizen status, but it may be more important for younger adults with families. As soon as your spouse or significant other is depending on your income, you have a responsibility to safeguard their will being.
When you are the parent of a dependent child, the stakes are even higher. Most people understand why they should carry health insurance even if they have not been to a doctor in years. People that have never been in accidents have vehicle insurance.
Why would you take chances with the financial security of the people that you love the most? Granted, a young adult may not have considerable resources, but life insurance can act as an income replacement vehicle. Term life is affordable enough to fit into virtually any budget.
There is also the matter of child guardianship and the management of an inheritance for a minor child. You can designate a guardian in a simple will, and the trustee of a living trust would be empowered to manage assets on behalf of a child.
Every estate plan should include an incapacity planning component. You state your life support preferences in a living will, and you name an agent in a durable power of attorney to make decisions that are not related to life-support.
The plan should include a HIPAA release to give your agent the power to access your health care records. HIPAA protections apply to all adults, so if you have a child that is reaching the age of 18, they should sign a release to give you the ability to speak with their doctors.
Estate Plan Reviews
Even if you have an estate plan in place, the work is not permanently done forever. Life circumstances can change, and your existing estate plan may become obsolete in one way or another.
In addition to the beneficiary designations and choice of administrators, you may be in a far better financial position that you were when you established the plan. It should be updated under these circumstances to reflect your new financial profile.
Most people do not have to worry about it because it only applies to estates that are worth millions of dollars. However, if you are in possession of a significant store of wealth, the estate tax can take a heavy toll on your legacy. There are steps that you can take to ease the burden if your estate will be vulnerable.
In addition to details that are specific to you as an individual, laws that impact aspects of the estate planning process are subject to change. For example, the exclusion is the amount that can be transferred tax-free before the estate tax would be levied on the remainder.
Right now, it is $11.7 million, but is going down to $5 million indexed for inflation in 2017. This is just one of many relevant laws that are subject to change.
As a layperson, you probably do not follow every law that has something to do with estate planning. When you schedule periodic plan reviews with an estate planning lawyer from our firm, we can let you know if changes will have an impact and adjust the plan accordingly.
We Are Here to Help!
Our doors are open if you are ready to work with a Cincinnati estate planning lawyer to develop a plan or review your existing plan. You can send us a message to request a consultation appointment, and we can be reached by phone at 513-721-1513.