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How Often Should I Review My Estate Planning Documents?

In a perfect world, you should review your estate planning documents every time there is a life event, such as a,

  • Birth,
  • Death,
  • Marriage,
  • Divorce, or
  • Retirement.

You also want to review them with the acquisition or sale of a significant asset, like that of a business. These are times to pull out your estate planning documents and review them.

The first thing to do is to review your beneficiaries and the terms under which those beneficiaries are receiving property. If your estate plan is twenty years old and your children were ten years old at the time you had them drafted, some of those terms may no longer be relevant. The kids are now grown, you want to create different conditions under which they are to receive property.

Sometimes you need to name guardians for minor children. If you have your first child, a discussion needs to be had with a potential guardian and with your estate planning attorney to make sure that there are safeguards in place to adequately take care of that child.

Not just the child’s wellbeing, but the assets the child inherits. Much like an incompetent adult, a child is deemed to be incapacitated as a matter of law, until the age of 18. If a child inherits property under the age of 18, the court appoints a guardian to manage that child’s money. At age 18, the child can walk into the courthouse and ask for a check for everything left in his trust or guardianship account unless stipulations are properly in place.

Parents tend to be uncomfortable with the idea that their 18-year-old child potentially inheriting large sums of money, such as a 401(k). They fear the 18-year-old will withdraw large sums from an account and spend them as quickly as possible. Not only is this financially irresponsible, but it also creates tax liability. These are issues we can anticipate and plan around.

If you don’t have any significant life changes, you should still pull out the document every three to five years, just to make sure. Don’t let it sit in a file cabinet for twenty or thirty years, until your spouse needs to actually implement the plan, without reviewing it.

Do I Need an Estate Planning Attorney? Can I Do This on My Own or With An Online Estate Planning Service?

Do It Yourself, or “DIY” services are fine for certain circumstances, they have evolved, but they are still not adequate in most situations. I still see many Do It Yourself estate plans, such as wills and trusts, that are not adequately drafted. They may be ambiguous, have contradictory terms in them, or are not executed under the proper formalities required in North Carolina.

With estate planning, if it becomes more complex than leaving everything to a spouse, then to an adult child, you should contact an attorney to walk you through the process.

How Do I Plan for Possible Incapacity During My Lifetime? What Estate Planning Documents Are Necessary?

There are several estate planning documents that we prepare for our clients to anticipate some form of incapacity, including

  • Healthcare powers of attorney,
  • Durable powers of attorney, and
  • Trusts.

Healthcare powers of attorney are distinguishable from durable financial powers of attorney, in that they are limited to only the scope of making healthcare decisions for a person when that person is incapable of communicating their desires regarding their healthcare on their own. If they can blink their eyes, nod their head, or write on a chalkboard what it is they would like, then the power of attorney instrument for healthcare doesn’t become effective. However, if they are in an accident and they’re unconscious, or under general anesthesia for a procedure, a healthcare power of attorney will help facilitate access to important information, such as,

  • Medical records,
  • Insurance information, or
  • Pharmacy records.

With a healthcare power of attorney in place, as well as a signed Health Insurance Portability and Accountability Act (HIPPA) release, or release for medical information, family members will have access to this important information needed to make healthcare decisions for you.

Another instrument that we use to anticipate an incapacity is durable powers of attorney for financial matters. This isn’t a document that’s strictly limited to financial matters because it is extremely broad. You must be very careful in who you choose to be your agent under a power of attorney because that person will have the authority during your incapacity, and sometimes even when you can manage your own assets, to make financial decisions in your name. This is a powerful instrument; however, it is a necessity for everyone to have a durable financial power of attorney to let a spouse or child be able to control assets while you’re incapacitated.

A trust is another excellent example of an instrument that can be used to prepare for incapacity. They facilitate a smooth transition of control of assets. The incapacitated spouse may serve as the trustee of their own trust, up until the point they become incapacitated. They can name a successor trustee, perhaps their spouse, child, or a corporate fiduciary, like a bank trust department.

There needs to be somebody serving as a trustee of the trust beyond the incapacity. At that point, there’s no need to transfer or retitle assets.

The power of attorney instrument provides a vehicle by which there is a vested authority in the agent, under that power of attorney, to transfer the incapacitated individual’s assets into their trust. This is how a power of attorney and a trust agreement can interact with one another to reach positive results for protecting and managing assets for an incapacitated person.

For more information on Estate Planning Law in North Carolina, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling 704-248-6325 today.

James E. Hickmon PA, North Carolina Estate Planning & Fiduciary Law Site Icon


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