Klitzman Law Group, PLLC

The Big Eight: Don’t Risk Your Retirement with These Mistakes

“A big part of generating enough income to live off of in retirement, is identifying and mitigating risks to that income stream. Bear markets, interest rates and inflation can all wreak havoc on retirement income. Physical and mental wellness, along with personal disposition and behavior patterns, also impact retirees’ financial decisions.”

During our working lives, we have a cash flow called a “paycheck” that we rely on. A similar cash flow occurs when we retire and start the process of “deaccumulation” or creating income streams from sources that include our retirement funds. However, generating enough income to enjoy a comfortable retirement requires managing that cash flow successfully, says CNBC.com in the article “Here are 8 costly retirement mistakes to avoid.”

Preparing for the risk of a bear market. If markets take a nosedive the year you retire and you stick with your plan to withdraw four percent from your portfolio, your plan is no longer sustainable. Better: have an emergency fund in place, so you don’t have to tap investment accounts until the market recovers.

Investing with inflation in mind. We have been in such a low inflation environment for so long, that many have forgotten how devastating this can be to retirement portfolios. You may want to have some of your money in the market, so you can continue to get rates above any inflation. If inflation runs about 3.5% annually, a moderate portfolio returning 6% or 7% keeps up with inflation, even after withdrawals.

Be ready for longevity. Worries about outliving retirement savings are due to a longer overall life expectancy. There’s a good chance that many people alive today, will make it to 95. One strong tactic is to delay taking Social Security benefits until age 70, to maximize the monthly benefit.

What about interest rates and inadequate returns on safer investments? This is a tricky one, requiring a balance between each person’s comfort zone and the need to grow investments. Current fixed-income returns lag behind historical performance. Some experts recommend that their clients look into high-dividend stocks, as an alternative to bond yields.

Prepare NOT to dump stocks in a temporary downturn. Without strong stomachs and wise counsel, individual investors have a long history of dumping stocks when markets turn down, amplifying losses. We are emotional about our money, which is the worst way to invest. Try working with a financial advisor to remove the emotion from your investments.

Don’t withdraw too much too soon. It looks like a lot of money, doesn’t it? However, even 4% may be too much to take out from your investments and retirement accounts. It all depends upon what other sources of income you have and how markets perform. Be careful, unless going back to work in your seventies is on your bucket list.

Prepare for cognitive decline. This is way harder to conceive of than inflationary risks, but it becomes a real risk as we age. Even a modest level of age-related cognitive impairment, can make managing investments a challenge. Have a discussion with family members, your estate planning attorney and a financial advisor about deciding who will manage your investments, when you are no longer able.

Are you ready for health care costs? If at all possible, wait until 65 to retire, so you will be eligible for Medicare. Even when you have this coverage in place, there may still be considerable expenses that are not covered by Medicare. If you don’t have long-term care insurance, get it as soon as possible.

Reference: CNBC.com (March 5, 2019) “Here are 8 costly retirement mistakes to avoid.”

Digital Assets in Estate Planning: The Brave New World of Estate Planning

“According to a new report from Kaspersky Lab, more than one in 10 people have now used cryptocurrency to make a purchase. As this number continues to grow, so does the importance of understanding the potential tax and estate planning consequences.”

Cryptocurrency is almost mainstream, despite its complexity, says Insurance News Net in the article “Westchester County Elder Law Attorney… Sheds Light on Cryptocurrency in Estate Planning.” The IRS has made it clear that as far as federal taxation is concerned, Bitcoin and other cryptocurrencies are to be treated as property. However, since cryptocurrency is not tangible property, how is it incorporated into an estate plan?

For starters, recordkeeping is extremely important for any cryptocurrency owner. Records need to be kept that are current and income taxes need to be paid on the transactions every single year. When the owner dies, the beneficiaries will receive the cryptocurrency at its current fair market value. The cost basis is stepped up to the date of death value and it is includable in the decedent’s taxable estate.

Here’s where it gets tricky. The name of the Bitcoin or cryptocurrency owner is not publicly recorded. Instead, ownership is tied to a specific Bitcoin address that can only be accessed by the person who holds two “digital keys.” These are not physical keys, but codes. One “key” is public, and the other key is private. The private key is the secret number that allows the spending of the cryptocurrency.

Both of these digital keys are stored in a “digital wallet,” which, just like the keys, is not an actual wallet but a system used to secure payment information and passwords.

One of the dangers of cryptocurrency is that unlike other financial assets, if that private key is somehow lost, there is no way that anyone can access the digital currency.

It should also be noted that cryptocurrency can be included as an asset in a last will and testament as well as a revocable or irrevocable trust. However, cryptocurrency is highly volatile, and its value may swing wildly.

The executor or trustee of an estate or trust must take steps to ensure that the estate or the trust is in compliance with the Prudent Investor Act. The holdings in the trust or the estate will need to be diversified with other types of investments. If this is not followed, even ownership of a small amount of cryptocurrency may lead to many issues with how the estate or trust was being managed.

Digital currency and digital assets are two relatively new areas for estate planning, although both have been in common usage for many years. As more boomers are dying, planning for these intangible assets has become more commonplace. Failing to have a plan or providing incorrect directions for how to handle digital assets, is becoming problematic for many individuals.

Speak with an estate planning attorney who has experience in digital and non-traditional assets to learn how to protect your heirs and your estate from losses associated with these new types of assets.

Reference: Insurance News Net (Feb. 25, 2019) “Westchester County Elder Law Attorney… Sheds Light on Cryptocurrency in Estate Planning”

Health Care Decisions in 2019 Require a Medical Power of Attorney

“A few months ago, I was planning knee replacement surgery. While providing the required pre-surgical information, including current medications, health history and more, the medical staff asked a question I was unable to answer.”

The patient above was asked if he had a living will or a health care directive. He wondered, why are they asking me this? It’s a simple knee replacement surgery. Do they think I am going to die? However, as discussed in the article “Take control of health care decisions in 2019 | Coming of Age…Again” from the Kirkland Reporter, all of these documents need to be in place anytime a medical procedure takes place, no matter how routine the patient may think it is.

Someone, whether a parent, spouse, friend or colleague, needs to be able to have the legal power to make decisions on your behalf, when you cannot. You need a health care directive or a durable Power of Attorney for health care, or both, or to have both of these documents combined into one (depending upon the state you live in; these laws vary by state). In Washington, the official term is health care directive. In other states, the term living will is used.

The health care directive is used to tell doctors and medical caregivers of your choices about medical interventions that you would or would not want to be used, in the unexpected event that you become seriously or critically injured, terminally ill or unable to communicate with those around you.

If you don’t have this document, the decisions will be made by select members of your family with health care professionals. If you don’t want certain things to happen, like being intubated or put on a feeding tube, and they feel strongly that they want to keep you alive, your wishes may not be followed.

A Power of Attorney and health care directives are created when working with an estate planning attorney to create an overall estate plan, which includes your will and any necessary trusts. These documents are too important to try to do on your own. There are major implications. What if they are not executed properly?

The person who is your health care agent has the authority to stop medical treatment on your behalf, or to refuse it. They can hire or fire any medical professional working on your care, and they can determine which medical facility should treat you. They can visit you, regardless of any visitation restrictions, and review your medical records. A durable Power of Attorney for health care gives this person the right to make decisions that are not necessarily covered in your health care directive.

Note that you can revoke your Power of Attorney document at any time, with a written notice to your agent.

These are complicated matters that deserve thoughtful consideration. The person you name will have tremendous responsibility — you are putting your life into their hands. Make sure the person you select is willing to take this responsibility on and have a secondary person in mind, just in case.

Reference: Kirkland Reporter (Feb. 20, 2019) “Take control of health care decisions in 2019 | Coming of Age…Again”

Inherited Real Estate That You Don’t Want? Here’s What to Do

”Getting an inheritance when a loved one dies, doesn’t always feel like a windfall — especially when it’s real estate that you don’t want. If you live in a state with an inheritance tax on property, you might not want to deal with a tax bill, or you’re dreading the hassle of selling the property.”

You may have inherited real estate property and not have any experience in owning, managing or selling real estate, so it may feel like an overwhelming burden, says AOL in the article “What to do when you inherit real estate that you don’t want.” However, it’s really not all bad news. You have many options, when you inherit real estate property. You just need to learn what to do with it.

The first thing to know is that you are probably in the middle of a very emotional time, so it’s best not to do anything for the time being. In some states, you don’t have a choice about that, and it’s not a bad thing. For example, in Arizona, there is a 90-day waiting period before you can sell an inherited home.

You will need to start looking for an attorney and a real estate professional to evaluate your options, before doing anything. The estate planning attorney who handled the estate will be able to help, as there will likely be some taxes to be paid and they may be familiar with the property.

Be aware that you are a target for real estate investors. People who inherit real estate may not know the property’s value or understand why it may be worth more in the future. They also know that children often want to get rid of their inherited property quickly, and that a cash payout can be very tempting. They expect to get the property from you at a great discount, fast. Don’t fall victim to this.

Find out how much the property is worth. Do a lot of homework. Look at comparable properties in the area. Don’t rely too heavily on an appraisal, which may have been done as part of the valuation of the estate by the person who gave you the property. Sometimes the appraisal may be dated, or it may reflect other factors that are no longer relevant to the property’s value.

Speak with a number of realtors before choosing one. Remember that they are sales people and have winning personalities and a sympathetic ear. This is a business transaction first. Have them prepare estimates on the value of the property and ask for references. Contact the references and speak with them candidly.

There will be costs associated with the sale of the property. In addition to the real estate commission, you may have to make some investments in the property, if it has not been taken care of over the years.

You might consider selling the property at auction, as-is, which would eliminate any need to dress it up and would speed the process. However, be careful when it comes to the buyer of your property and make sure all costs and fees are in a contract. Have your attorney review the contract to be sure no one is taking advantage of you.

Take your time and be cautious. Your estate planning attorney will have some guidance for you. Selling the family home is an emotional experience, but as a seller, you’ll need to be all business.

Reference: AOL (Feb. 25, 2019) “What to do when you inherit real estate that you don’t want”

Plan Before a Health Crisis Strikes

“We were too young, we would have plenty of time when we are older, when life was slower, right? Or so we thought. I made a guess about my husband's health care desires and into surgery he went.”

A woman wakes up to hear her husband gasping for breath, unresponsive and in full cardiac arrest. He was only 55, he biked 25 to 50 miles every day, he ate right and was one of the healthiest people she knew. Yet, he was having a heart attack. He did not have a health care directive in place, and she did not know what his wishes were in the case of a health emergency.

The story, as related in “START WITH A PLAN (not a heart attack)” from OakPark.com, is not as unusual as one would think. What does make it unusual, was that both of these individuals are attorneys. They had never had an estate plan created or drafted documents.

As the woman sat by his hospital bed in the critical care unit after his surgery, she started thinking about the practical realities. If he remained unconscious for some time, how would she access his individual finances, his paycheck or pay the monthly bills? She would need to hire an attorney and seek guardianship from the court to handle his financial affairs. If he died, she’d have to hire an attorney and open a probate case.

Without a will in place, her husband’s estate would be deemed intestate, and the laws of the state, in her case, Illinois, would be applied to distribute his property. Half of his property would be distributed to his children and the other half to her.

That might mean she would have to borrow money from her own children to pay bills and cover their college tuition.

Her husband responded well to the surgery, but at one point he needed to be transferred to another hospital. As they traveled by ambulance to another hospital, a terrible thought occurred to her: what if the ambulance were in an accident and they were both killed? Who would rear their children? How long would it take to settle the estate, with no will?

Thankfully, the ambulance arrived safely at the hospital, her husband recovered from his heart attack and the first thing they attended to when he recovered was their estate plan.

It’s a dramatic story, but a telling one: everyone, no matter how healthy, needs to have an estate plan in place. That means a will, power of attorney, healthcare proxy, HIPAA release form and any other planning tools that each family’s situation may need.

Make an appointment to meet with an estate planning attorney to put your plan in place. Don’t wait until you have time, because you never know when you may run out of time.

Reference: Oak Park.com (Feb. 27, 2019) “START WITH A PLAN (not a heart attack)”

How Trusts Help Estate Planning

“Although there are dozens of types of trusts, the most common trust used for these purposes is a revocable living trust.”

The reason the revocable living trust is so appealing is in its name: it can be changed by the grantor at any time. The revocable trust lets you determine exactly how you want your estate to be distributed to beneficiaries upon your death, and can be used to put some assets out of reach of probate, says Barron’s in the article “Why a Trust is a Great Estate Planning Tool – Even if You’re Not Rich.”

Many people want to try to avoid probate, the legal process by which a will is deemed to be valid. The problem of probate is that in some states, it can take a long time, and court fees can mount up quickly. Depending on where you live and how complex your estate is, it could potentially add about 5% to the value of your estate.

There are a number of ways to avoid probate, including owning property jointly, using payable-on-death (POD) accounts, or payable-on-death transfers. Many people use trusts to solve this problem. An estate planning attorney will review assets and determine which ones should be assigned to the trust. Some people chose to put all of their probatable assets into the trust. That may include brokerage accounts and real estate, jewelry, art collections and other valuables.

Retirement accounts, insurance policies and any other assets with beneficiaries are not included in the trust, because they do not go through probate.

The revocable trust allows you to control the trust, including making changes or revoking it completely.

There is a trade-off, however. Since the trust is considered part of your estate, it does not offer tax benefits or asset protection. An irrevocable trust is used by estate planning attorneys to remove assets from the estate, but they are difficult to change or cancel.

Another benefit of a trust is to provide you with clarity and control. A trust can be used to outline exactly how you want heirs to receive their inheritance. You can specific the ages and conditions for heirs. That may include completing college or reaching a milestone in life.

In families with special needs individuals, a Special Needs Trust is used to protect an individual’s ability to receive government benefits. Special Needs Trusts are designed, so that disbursements can take place to cover costs for health or comfort that may not be paid for by Social Security, Medicare or other programs.

In blended families, trusts clarify which assets should go to a surviving spouse and which should go to the children of a first, second or even third marriage.

An estate planning attorney will be able to review your personal situation and make recommendations for the type of trust that will work best for you and your family.

Reference: Barron’s (Feb. 23, 2019) “Why a Trust is a Great Estate Planning Tool – Even if You’re Not Rich”

 

Family Meetings and Trustworthy Siblings Needed to Help Aging Parents

“If your parents are at a point where they struggle with their financial affairs, increasing your family communication can help them get the help they need.”

It gets tricky when aging parents start having problems managing their own financial and legal affairs. Siblings can be a challenge, if they lack the ability to understand the changing roles from adult child to caregiver, or if they don’t know how to manage the “business side” of life. That, says the Monterey Herald in the article “Financial planning: Family communication helps aging parents,” can lead to challenging circumstances for aging parents and siblings.

For one thing, parents are often reluctant to seek help, even if they are aware that things are not right. Notices of missed payments may be stuffed in a drawer or left to pile up in stacks on a desk that was once orderly and tidy. Depending on where adult children live, this state of affairs could go on for a very long time, until someone realizes that it’s not for lack of money, but their capacity is starting to diminish. If you are nearby and visit often, you may not notice until things are in a bad state. If you live far away, you may not know until an annual visit brings you to a home that’s in a state of disarray.

Some siblings are easy to work with and understand the challenges that aging parents face. However, others don’t have the temperament or the knowledge to help out. If they are estranged from the parents, they obviously won’t be much help and could get in the way. Trying to reach out and keeping them informed may be difficult. However, it may also be necessary.

If there is a good relationship with siblings and they all live relatively close to each other, the family should begin with a series of regular family meetings. Ideally, the parents call the first meeting to take place, and they are able to take the lead in explaining why everyone is gathering and what needs to be accomplished. If they are not capable of doing that, or don’t want to do that, because they don’t want to be seen as needy or pushy, then an older sibling usually steps up.

A family with a history of good communication can usually deal with the legal and financial matters in several meetings. A family that rarely talks or only speaks during the holidays will need to get accustomed to working with each other in a productive manner. Some families meet at their estate planning attorney’s office. The attorney can serve as a facilitator, while an estate plan is put into place. Often, a neutral, third-party meeting place can diffuse some of the old family dynamics, which often emerge when a family meets at the family home.

Start by putting together a summary of the parent’s situation. What are their expenses, and what are their sources of income? How are their investment accounts titled? Do they have an estate plan? Have they named beneficiaries for their retirement accounts and life insurance policies? Is there a long-term care policy in place? How is their home titled, and where is the deed located?

Having the answers to these questions, will also help you protect parents from financial elder abuse.

Evaluate their health with a realistic view. Do they have the health coverage they need? Are they independent now, and what is the prospect for their future independence? If they should become less able to live on their own, what will that look like? How will that be paid for?

Next, review their legal status. Do they have a will, power of attorney, health care power of attorney and HIPAA release form? If their estate plan has not been reviewed for more than three years, it needs to be updated. Many financial institutions and some health care facilities will not accept documents that are more than three to five years old. If any documents were created before HIPAA went into effect (2001), then they definitely need an updated estate plan.

The goal is to prepare as much as possible in advance, rather than reacting to a crisis. Increasing family communication around caring for aging parents can also bring siblings closer together, with a shared cause. Getting parents the care they need before an emergency, will also leave everyone in the family knowing they’ve done the right thing.

Reference: Monterey Herald (Feb. 20, 2019) “Financial planning: Family communication helps aging parents”  

Social Security and Divorce

“Did you know Social Security spousal benefits extend to certain ex-spouses who have gotten divorced?”

Almost 70% of unmarried retired Americans and nearly 50% of married retired Americans count on Social Security benefits for half or more of their income, reports Yahoo! Finance in the article “3 Things to Know About Social Security if You’re Divorced.” Anyone facing retirement, especially if they are single, needs to know as much as possible about Social Security benefits and what they are entitled to receive.

If you are divorced after 10 years of marriage and have not remarried, you may be eligible for spousal benefits from your ex-partner’s work record. Your spouse has to be eligible for Social Security and must be at least 62 years old for you to be eligible.

Bear in mind that many people elect not to start collecting benefits, until long after they turn 62. There are good reasons for this. For every year that people delay taking their Social Security benefits from between age 62–70, they’ll receive roughly 8% more in their monthly check. If you expect to live a long time, the longer you can delay claiming benefits, the better.

Full Retirement Age (FRA) has changed, and now you won’t reach FRA, until sometime between the ages of 65 (if you were born in 1937 or before then) to 67 (for anyone born in 1960 and later).

Remember, it doesn’t matter if your ex has begun taking Social Security benefits — just whether they are eligible to do so. Your ex-spouse’s marital status doesn’t matter either. They might be remarried, divorced, widowed, etc. That doesn’t have any bearing on your ability to file a claim, or the amount of the claim. Your claim won’t have any impact on your ex’s benefits or their new married partner’s benefits.

What does matter: if your ex has not yet applied for Social Security benefits, there is a requirement that you need to have been divorced for at least two years, before you can receive the spousal benefit.

Here are three key things you need to know about filing for Social Security if you’re divorced:

• If you’ve remarried, you can’t claim benefits on an ex-spouse’s Social Security. If you remarried and then divorced again, you can claim spousal benefits, as long as the second marriage lasted ten years.
• To claim spousal benefits, you must be 62 or older.
• You must also be entitled to a benefit that is smaller than your ex’s work would qualify you to receive.

How can you find out what your benefits would be, and what your spousal benefits would be? To receive Social Security, you need a work history that earns a total of 40 lifetime work credits. This is based on income and time. Four work credits are the most you can earn in one year, even if you are earning millions. Once you qualify, an earnings history kicks in to determine the amount you are entitled to. The benefits are calculated on the 35 highest-income, inflation-adjusted years. If you’ve worked fewer than 35 years, $0 is averaged into the monthly payout calculation for every year under the 35 years.

Spousal benefits are determined by computing your work and earnings history and your ex’s work history and salary history. If you are qualified for a spousal benefit, the benefit is 50% of your ex’s FRA, if you began taking benefits at your FRA. Let’s say your ex is eligible for $2,000 a month in Social Security benefits. You’d get $1,000. If your ex delays receiving Social Security benefits past their FRA, the increasing amount is not applied to your spousal benefit.

If you have a healthy work and earnings history of your own, the Social Security Administration will pay your own retirement first, and then compute your potential benefit from your ex’s work and earnings history. With that information, the SSA will adjust the benefit to ensure that you receive the higher amount.

Here’s a way to max out your Social Security benefit, if you meet the requirements to do this: take just the benefit for yourself as a divorced spouse and delay taking your own. That way, you can receive that 8% annual hike in your benefit. However, if your birthday is Jan. 2, 1954 or later, that option is phased out.

Reference: Yahoo! Finance (Feb. 16, 2019) “3 Things to Know About Social Security if You’re 

How to Combat Elder Financial Abuse

“Regulators are stepping up efforts to protect seniors. However, you still need to create your own safety net.”

One estimate is that the amount of elder financial fraud is $30 billion a year, defining it as the theft of money by thieves who include con artists, strangers, caregivers or trusted friends or family members. According to Consumer Reports, in the article “3 Critical Ways to Prevent Elder Financial Abuse,” these crimes are often not reported. Sometimes, the seniors are too embarrassed to admit that they were fooled, or they don’t want to put a family member at risk. They often don’t know they have been scammed, or are physically unable to articulate what has happened to them.

This is starting to change, as banks are starting to increase their reporting of suspected elder financial abuse. Last year, U.S. banks reported roughly 25,000 cases of suspected elder financial abuse to the U.S. Treasury. That’s more than double the amount reported in 2013, as reflected in data from the U.S. Treasury department’s Financial Crimes Enforcement Bureau.

One reason behind the surge is demographics: although the baby boomers are getting older, they have a tremendous amount of assets and are vulnerable to being defrauded.

However, the increase in reported cases may also be bolstered by big pushes from the federal government, states, and the financial industry to fight elder financial abuse. New regulations are now in place to encourage people who are on the front lines for elder abuse: brokers, bankers and financial advisors.

FINRA, the self-regulatory agency that oversees brokers, now requires them to ask clients, no matter how young or old, to provide the name and contact information for a trusted family member or friend. If the broker believes that person is being exploited, they have someone to contact. The new regulations also allow brokers to put a hold on withdrawals from a client’s account, if they believe there may be elder financial abuse occurring. The hold is for 15 days but can be extended 10 more days.

From the federal government, the Senior Safe Act became law in 2018. It enables the employees of any financial institutions to report concerns about elder abuse, without fear of being held liable for disclosing private information. To qualify for this protection, financial institutions are required to provide training to staff about recognizing the abuse. At the state level, NASAA (the North American Securities Administrators Association, a group of state regulators) adopted a rule in 2016 which mandates that brokers and financial advisors report any suspected abuse to state authorities. The rule also allows them to stop withdrawals on accounts and protects brokers and advisors from liability, if they stop account disbursement. Sixteen states have enacted versions of the rule, and there are six more states working on legislation.

On a more personal level, there are three things family members and friends can do to prevent elder financial abuse. One is to stay in touch and ask questions of aging parents. Isolation and cognitive impairment are the biggest risk factors. Make sure that your parent is keeping up with bill paying, and whether he or she is in contact with new friends, strangers who may not have their best interests in mind.

If your parent is willing, start by offering to help with a few financial tasks, like bill paying. Keep it low key, by including a visit with the task. If you see things are not being handled well, stay on top of it.

Another step is to set up checks and balances, by making sure that critical legal documents are in place. There should be a will, a healthcare proxy, a HIPAA release form and a durable power of attorney. The durable power of attorney will let you pay bills and manage finances, if and when they can no longer manage. If there is no will or estate plan in place, make an appointment for your parent with a qualified estate planning attorney as soon as possible.

Consider streamlining aging parent’s finances. If they have too many credit cards and too many bank accounts, it may make things easier if they can pare things down to one bank and one credit card. Be very careful with retirement accounts, like 401(k)s and IRAs, to avoid any taxes and penalties.

Simplifying money management and being involved with your parent’s finances and their lives can help prevent financial elder abuse.

Reference: Consumer Reports (Feb. 22, 2019) “3 Critical Ways to Prevent Elder Financial Abuse”

Suggested Key Terms: Elder Financial Abuse, Baby Boomers, Fraud, Healthcare Proxy, HIPAA, Senior Safe Act

When Should You Have Your Estate Plan Done?

“If you have at least gone to the trouble of making a will, consider yourself ahead of the curve and pat yourself on the back.”

But don’t pat yourself too much — you’re not done yet. A will is not a static instrument, says The Item in its recent article “Don’t wait until high noon.” If laws change, which happens regularly, or your life changes, you need to review your will and be aware of any significant changes that may have an impact on your will and its goals.

Marriage, divorce, birth, adoption and death are some of the key trigger events in life that call for a review of your will. Some of these events seem very obvious, but others aren’t. That is when problems can arise. For instance, if a widow or widower remarries, the will needs to be updated to clarify how the new spouse and the children from prior marriages are to be provided for.

Welcoming a new child into the family is an event to celebrate, whether by birth or adoption. The will needs to add the new child. However, there’s another step that may be even more important. A will is used to name a guardian for the child, so the parents may name a person to rear their child in their absence. If a guardian is not named, then the court will select someone who might have not been the parent’s first (or even second) choice.

The death of an executor, beneficiary, guardian or trustee named in the will also means that the will needs to be updated. If the person who has died is a beneficiary, their name needs to be removed.  You may want to reconsider how assets are distributed. For executors, guardians or trustees, remember to add a secondary person for each role.

What if you inherit an unexpected fortune? You’ll definitely need to review your will, since your estate tax liability may have changed. Even if you don’t owe federal estate taxes, there may be state estate taxes to plan for. If you suffer a large financial loss, you’ll need to review your will, since the generous gift you had planned on leaving to a nonprofit. may no longer be available.

Some changes to wills occur because people change their minds about how they want to distribute their assets, or who they want to handle their post-mortem responsibilities. If you have a falling out with an executor, for instance, that change needs to be made in a timely manner.

If you have not reviewed the beneficiaries who are named on your life insurance policies and retirement accounts, and any other accounts where beneficiaries are named, you’ll want to do that too. If your will says cousin Andrew gets your life insurance policy proceeds, but his sister Stella is the one named as the beneficiary, then only Stella receives the proceeds. The named beneficiary is a contract that cannot be challenged or changed, regardless of what your will says.

If you don’t yet have a will, now is the time to make an appointment to meet with an estate planning attorney in your community. Remember that estate laws are set by the state of your residence, so an experienced estate planning attorney in your area is your best source.

Reference: The Item (Feb. 15, 2019) “Don’t wait until high noon”