An estate plan is a careful accounting and forward-looking plan for your assets. Estate plans can include trusts, a will, power of attorney, and long-term tax planning considerations. Keeping these documents updated is crucial to their proper synchronization when a triggering event occurs.
An estate law specialist is the best person to consult regarding current state laws and regulations that apply to these crucial plans. By working together you can ensure that your family is cared for and your wishes are honored.
Illinois’ notorious probate process can entangle your assets and cost your estate thousands in fees if your plan does not maximize coverage of your assets.
Events That Prompt Changes to Estate Plans
Major life changes should cause a review of your estate plans. Oftentimes, people establish their wills, trusts, and powers of attorney years before they’re expected to be used, but circumstances change.
Estate planning experts suggest a periodic review of all estate documents, such as every five years, but significant life events should also prompt an assessment of the documents. Such triggering events include:
- Marriage or divorce,
- Receiving an inheritance,
- Serious illness,
- Retirement,
- Relocating to another state,
- Birth of a child,
- Changes in tax law,
- Buying or selling major assets, or
- Death of a principal, such as your spouse, your will’s executor, or a beneficiary.
Changes to your family, such as children becoming emancipated, are a reason to reconsider some estate planning decisions and consider all of your options. An heir who has trouble managing money or who may not be trustworthy with a significant payout from your estate can receive smaller portions over time. Your trust documents can structure such payouts in almost any way you wish.
If you’re divorced or widowed and have minor children, the estate plan should name a guardian (to be approved by probate court) and arrange for support payments.
Relocating to a different state could complicate your estate plan by introducing a different set of requirements and new taxes. If you move out of the country your plan could be invalidated. In either case, having the documents assessed by an estate planning professional can provide clarity.
Key Components of Your Estate Plan
Reviewing your estate plan to make sure it’s up-to-date should include an assessment of your health care plans as well. If you created a trust, will, and designated heirs, that might not be enough anymore. As we age, having a power of attorney and healthcare proxy are essential as well.
There are several types of powers of attorney that can be enacted under specific circumstances. Most start immediately when the paperwork is signed, witnessed, and notarized. They include:
- Financial. This power of attorney is limited to financial decisions such as paying bills, selling stock, and signing loans.
- Medical. A person designated as your medical power of attorney makes decisions on your healthcare, including end of life issues.
- Durable. A durable power of attorney is one that continues when the principal is incapacitated. Most states default to durable power of attorney.
- Limited. A person can act on your behalf for a specific task such as selling your home or paying your monthly bills.
- Springing. This form of power of attorney is triggered by a precipitating event, such as a medical emergency or other prolonged incapacitation.
Have Your Estate Plan Reviewed Today
Optimize potential savings and establish a strategic estate plan to care for your family in the future with a detailed review of your planning documents.The estate planning professionals at Legacy & Life Law Firm are prepared to review or create estate documents with your desired outcome in mind. We can help you minimize your tax exposure, set up trusts to avoid probate, and make sure that all potential outcomes are considered.