New Year Review: Updating Your Estate Plan in 2010

So how about ringing in the New Year with a fresh look at your estate plan?  Here are a few areas to review:

Your will

Ask yourself these questions:

Has your marital status changed?
Are you still comfortable with the chosen executor?
How about the guardian of your children?
Does it still reflect your final wishes?

Remember, without a will, your assets won’t be passed on according to your wishes.

Life insurance policies

Make sure you have enough coverage to protect your family.  Has anything changed that would require an increase in coverage?  The birth of a child or additional financial obligations? 

Conversely, check to see if you have too much insurance.  Perhaps your financial situation has improved or you might not owe any estate tax due to an increase in the federal estate tax exemption.  In that case, save future premium payments by reducing coverage or canceling the policy.

Asset ownership

How you hold assets can determine how they will be distributed.  Holding assets in your name alone allows for flexibility and you can will them to anyone you desire.  However, in the event you become incompetent, you risk losing money to those who take advantage of the elderly in this situation, or to probate.  Some solely held assets are subject to the time and cost of probate at your death. 

These potential problems can be handled by titling assets as joint tenants with right of survivorship.  The joint owner can manage them if you are incapacitated.  These assets also pass to the joint owner without going through probate.  Note that these assets cannot be bequeathed to anyone else, they go to the co-owner regardless of what is stated in your will.

Durable power of attorney or trustee designate

Are you still comfortable with the person you’ve chosen to handle your affairs should you become incapacitated?  Do you trust they would make decisions with your best interests in mind? 

Beneficiary designates

Don’t forget about all life insurance policies, retirement plans, annuities, transfer-on-death and payable-on-death accounts. The designate overrides what is stated in your will.  So, carefully review your beneficiary selections to ensure they are current. 

While you can answer most of these questions yourself, I always recommend the counsel of an estate-planning attorney.  Laws and practices often vary from state to state, and the services of a professional will ensure that any changes comply with laws in your state.

Get a jump-start on the New Year and review your estate plan today!