Estate planning is an important part of adulthood, but it is just as important to keep estate plans up to date. Encourage your clients to review their plans annually to make sure there are no mistakes and any necessary changes happen in a timely manner. Here are five things to review every year to ensure things go smoothly when the estate plan is needed.
1. Major Life Changes
Start a review of an estate plan by discussing any major life changes that might have occurred since the plan was last written or reviewed. Tax season is an optimal time to review estate planning because clients are already looking at life events that may affect their taxes. Ask about marriage, divorce, birth or adoption, and changes in health status. Other things to take a look at include selling or gaining property or investments, the dependency status of children, including those with special needs, retirement status and recent or regular charitable contributions. Even minor changes in any of these areas might require changes to a client's estate plan.
Double check the beneficiaries on every account, especially IRA accounts. Each account needs both a primary beneficiary and a contingent beneficiary as a backup. If a change needs to be made, be sure to use account specific forms to smooth the process. Encourage clients to check their beneficiaries even if they are sure no changes are necessary, since even financial institutions make mistakes from time to time.
3. Financial and Medical Power of Attorney
Have clients review their financial and medical power of attorney assignments. If a client has been putting these decisions off, now is the time to encourage them to draw up the necessary paperwork. Accidents happen, and sometimes a person's health declines rapidly. Having these papers in place as part of an estate plan ensures a client's wishes are followed. It is a good idea to include some specific directives on the medical power of attorney forms. This helps your agents remember your personal health care preferences.
Titles on financial accounts, property, and insurance policies must include the full legal names of all people involved. The use of nicknames or common names on legal documents can lead to delays or problems in transferring property. Review names annually to keep everything current and consistent.
5. Legal Changes
During an annual estate plan review share any change in the law that might affect your clients. Changes in tax statues, regulations affecting IRAs and elder laws may cause clients to rethink portions of their current plan. If major changes are necessary, be ready to recommend a qualified estate attorney to help draft a new plan. A great attorney can create an estate plan that is flexible enough to handle minor legal changes.
The beginning of each year is a perfect time to remind your accounting clients to take a look at their current estate plans. Pay particular attention to important life events, beneficiaries and changes in laws that impact estates. When making changes, use account specific forms, and encourage clients to seek the help of a qualified attorney if major revisions are necessary.
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