When to Review an Estate Plan

Michael Brennan • December 14, 2017

So you’ve done some estate planning (maybe even a substantial amount), but now what? Do you just sit pat and let life happen? Well, it shouldn’t come as a surprise that filing your plan away and never re-examining it is probably not the best approach. After all, you did all that planning for a reason. Taking a look every now and then to make sure that the estate plan still reflects your goals and accomplishes your objectives will ensure that things are taken care of no matter what life throws your way.

Estate planning attorneys and financial advisors recommend reviewing your plan with your team at least annually to ensure that changes in the law, your family and financial situation are considered. However, if an annual review seems unrealistic to you, then here are a number of life events that should tip you off to the fact that a review may be in order.

Changes in the law

Gifting amounts. Paying attention to changes in the annual exclusion amount and utilizing it to make tax free gifts can be a beneficial tool in estate planning, but substantial changes in the amount may make you want to reexamine the amount of gifts you typically make. The total annual gift exclusion amount- meaning that it can be given to an unlimited number of individuals without paying any gift tax- is $14,000, but this wasn’t always the case and it certainly won’t stay this way.

Tax thresholds. Specifically the gift and estate tax limitations are important to pay attention to. Currently individuals can pass $5.12 million without estate tax consequence , but even as recently as 2003 the amount was only $1 million, meaning that anything owned at death and included in the deceased individual’s estate would be taxed a hefty amount. While 2013 brought some stability to the estate tax, it’s always possible that Congress will reduce the exclusion amount. So, if tax avoidance is a concern of yours, then it’s important to reexamine your plan anytime this amount changes.

Changes in financial situation

Investments. Changes in the value of your investments could mean that the value of your estate is changing in a relatively short period of time. It’s important to remember that the more net worth you have the more likely it is that you’ll need to consider how assets are titled and where they’ll be going when you pass away. Stay on top of it by reviewing your estate plan when your investments change substantially or the value of them changes.

Large gift or inheritance. Free money is never a bad thing… unless you don’t consider how it will affect your overall financial picture and estate plan. If you come into a large inheritance or gift it’s a good idea to review your plan to ensure that it’s clear what you’ll do with the additional money in the event something happens to you. Of course, this is one of those occasions that may also affect your tax liability, so speaking with your advising team right away will ensure that your newly acquired wealth won’t lead to any tax heartaches.

Purchase of (or cancellation of) a life insurance policy. When you purchase a new policy, it’s important to consider who you will name as the beneficiary in the event something happens to you. While that may be straight forward, it’s important to discuss the choice with your estate planning attorney to ensure that it won’t have any adverse consequences on your estate plan.

Purchase of a policy by another naming you as beneficiary. The same considerations apply if you have been named beneficiary under someone else’s policy (for example, a spouse). Your attorney can make sure that you won’t be subject to substantial liability- tax or otherwise- in the event you actually come into possession of those funds.

Making a substantial purchase. If you make the decision to purchase something like a new house, for example, it’s a good time to touch base with your estate planning attorney. Not only has your asset base changed, but real estate carries a number of special considerations from an estate planning perspective. From titling the property in the best manner to considering tax implications of the purchase, your estate planning attorney and financial team can make sure that you do things in the best way. Be sure to give them a call.

Changes to a pension or profit sharing plan. Same theme, different asset. Changes to any sort of deferred or future compensation should be considered when thinking about whether your estate plan will continue to reflect your goals.

Gifting away substantial sums that were initially to go to a beneficiary under a will or testamentary trust. An estate plan is only as good as the assets that you actually own. Fact of the matter is, life happens. Circumstances change. It’s common to see folks who have written a stone-solid estate plan , but then decide at a later time to unload some asset of chunk of money that they initially thought would go to someone else upon their death. There’s no reason not to do something like that, but it’s important to meet with your attorney and advising team if you decide to do so.

Unemployment or forced retirement. Changes in employment mean changes in income and may lead to the depletion of assets you initially planned to gift to others. If it does, it’s a good choice to speak with your attorney about how it affects your estate plan.

Litigation that may have an effect on the estate (positive or negative). This is a big one- whether potential or pending, litigation can mean hefty costs and potential large swings in net worth. If you’re involved in a lawsuit as a plaintiff or defendant, it’s a good idea to touch base with your estate planning attorney about what affect it may have on your planning.

Changes in the way property is held

Re-titling the deed to the house. Same concerns as purchasing a new property. If you elect to modify the way your deed is titled, it’s important to discuss the changes and effects with your attorney first.

Opening a payable-on-death account. Many states and financial institutions permit an account holder to add an individual to the face of the account, who, upon the death of the account holder, will automatically receive whatever funds remain in that account. Check with your estate planning attorney to make sure that the forms your bank gives you are sufficient to accomplish your goal.

Destruction, sale or loss of property.

Whether by choice or not, anytime you lose a piece of property- real estate or otherwise- it’s a good time to touch base with your advisors.

Changes in relationships.

Whether you’re getting married or divorced, this is a big one. Relationship changes can have huge implications on your rights to your assets and any your other half may own.

New family members.

Did your son just have a child? Did your brother just get married? Whatever the case- births, adoptions, marriages of family members, etc.- changes in fami8ly dynamics should be a red flag to anyone concerned about ensuring their estate planning objectives remain up to date.

Death in the family.

Never a pleasant topic, but things do happen. In the unfortunate instance that you lose a child, spouse, parent, sibling or someone else close to you, it’s important to ensure that your plan reflects the change in life circumstances. After all, while death isn’t a pleasant subject to think about, it was the reason you planned your estate in the first place. Don’t let the loss of a loved one change your goals of being organized and prepared.

Declining health

This one is tough. Not because of confusion, but because there is nothing that hits closer to home than your own well-being. What happens if you get sick? What about REALLY sick? While emotionally, you may be facing a maelstrom, individually, it’s important to realize that you still have your wits about you and being able to ensure your loved ones are taken care of is as simple as talking with your advising team.

Whether you’re just staring out in life or facing its final chapter, there are ways you can make sure those around you are taken care of. The above examples are just that- examples. If you’re interested in exploring how best to plan your estate, I suggest speaking with an estate planning attorney. Not only will he or she be able to help you plan for your family’s care now, but he or she will be able to make sure those goals remain in reach regardless of what life throws your way.

Michael F. Brennan is an attorney at the Virtual Attorney™ a virtual law office helping clients in Illinois, Wisconsin, and Minnesota with estate planning. He can be reached at michael.brennan@mfblegal.com with questions or comments, or check out his website at www.thevirtualattorney.com .

The information contained herein is intended for informational purposes only and is not legal advice, nor is it intended to create an attorney-client relationship. For specific legal advice regarding a specific legal issue please contact me or another attorney for assistance.

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[WATCH] Illinois Just Made it Easier Than Ever to Make a Power of Attorney

By Michael Brennan • September 9, 2021

Illinois Just Made It Easier Than Ever to Make a Power of Attorney

By Michael Brennan • September 2, 2021
A power of attorney for health care enables an individual to appoint a trusted agent to make medical decisions on his or her behalf if the individual is unable or unwilling to do so for themselves. For example, if a situation arises where you are in an accident and need emergency medical care, doctors will look to a trusted individual to make decisions on your behalf. Typically, this is family members, and technically, most state laws set an order of precedence on who doctors should turn to in the absence of any specific (and legally binding) instructions from the patient. However, the most ideal situation is one in which doctors rely on the instructions the patient has detailed in a valid power of attorney. Powers of attorney for health care do not have many specific requirements for validity. But, they do need to be signed by the patient and at least one witness (this varies by state). Often, someone may decide that they need a health care power of attorney in a pinch. For example, an older parent may be going in for surgery and want to cover their bases if something goes wrong. They may decide the day of the surgery that they would like to name an adult child as their health care decision-maker if something happens, so that child cannot serve as the witness. Typically, an estate planning attorney could witness the document, but that may mean scrambling at the last minute for an appointment or coordinating a meeting quickly on the way to the hospital. Not ideal. Now, however, Illinois has amended the Illinois Power of Attorney Act to permit electronic signatures. The Act states that: “The signature and execution requirements set forth in this Article are satisfied by: (i) written signatures or initials; or (ii) electronic signatures or computer-generated signature codes .” The Illinois Electronic Wills and Remote Witnesses Act permits those witnesses not only to sign electronically, but also to sign remotely. So, instead of a mad last-minute scramble to sign and witness an 11th hour power of attorney, one can be e-signed online through video conferencing with the principal and estate planning attorney quickly linking up on zoom from the comfort of their home, office, or even the hospital bed, with much more simplicity and convenience. The Power of Attorney Act was further amended to permit powers of attorney for health care to be in electronic format. So, it is no longer a requirement to dig the paper hard copy out of the basement filing cabinet and remember to bring it to the hospital. Instead, an electronic copy can simply be sent to the hospital through its patient portal, once that functionality is set up by the health care provider at least. The power of attorney can now easily form a seamless part of a health care record, neatly kept in an electronic medical file. The pandemic of 2020-2021 forced institutions to make things more efficient and reflective of the technologically-centric world we now live in. That is not more evident in many places as it is the area of law. And, few practicing attorneys would tell you that’s a bad thing.

Illinois Electronic Wills and Remote Witnesses Act Enacted

By Michael Brennan • August 5, 2021
On June 26, 2021, Illinois adopted the Electronic Wills and Remote Witnesses Act. Plainly, the Act is a generational game changer for estate planning. Gone are the days of scheduling a formal office appointment with your attorney to sign estate planning documents as the law office staff witnesses and notarizes those documents on the spot.

Illinois' Electronic Wills and Remote Witnesses Act is a Game Changer

By Michael Brennan • July 30, 2021
Preparing a last will and testament has always required the inclusion of original signatures of both the person making the will and witnesses. Understandably, coordinating the signing of the will could pose some administrative challenges, especially for small law firms and solo practitioners—not to mention the many people who elect to draft a will without an attorney’s help—who may not have a crowded office full of willing witnesses. Along with wills, estate plans typically include powers of attorney for finances and health care decision making as well. Those documents also require original signatures from their creators, witnesses, and notaries. Predictably, COVID-19 and the resulting government shutdowns of businesses and encouragement of social distancing and remote work complicated the task of signing and witnessing these important estate documents (Notaries are also now permitted to act remotely under a separate but related piece of legislation). Luckily, in many states, temporary orders permitted the remote execution of many documents, and a framework for conducting remote document signings began to take form. On June 26, 2021, Illinois adopted the Electronic Wills and Remote Witnesses Act. Plainly, the Act is a generational game changer for estate planning. Gone are the days of scheduling a formal office appointment with your attorney to sign estate planning documents as the law office staff witnesses and notarizes those documents on the spot. Now, under the EWRWA, the need for the conference table signing is gone. Wills, powers or attorney, and other important estate documents can be validly signed and witnessed remotely through audio-video communications. More so, “electronic wills”—those not physically printed on paper—are now an acceptable form of will in Illinois that can be probated just as paper wills have for decades. Some of the highlights of the new law are below. Electronic Copies of wills are now valid. Electronic Wills are now an option. The new law defines an electronic will as simply “a will that is created and maintained as a tamper-evident electronic record.” What is “tamper-evident” exactly? Well, the statute defines it as a “feature of an electronic record by which any change to the electronic record is displayed.” So, popular document signature software like Docusign and Hellosign would do the trick. Individuals and Witnesses can now sign on multiple signature pages with one master document being compiled later on. If a platform like Docusign is not used to create and sign an electronic will, there is now an option to use multiple signature pages for the testator and witnesses. In practice, this enables a testator to sign a will while the witnesses watch over audio-video means, like Zoom. They can then each sign the signature page sitting with them at their physical location. The testator and witnesses can then send the originals to a central location (likely the estate planning attorney) to be compiled into one master document. Previously, this was impermissible, as the document would have had to have been signed in the conscious presence of each other. The Electronic Wills and Remote Witnesses Act redefines “presence” to expressly include, “being in a different physical location from another person, but able, using audio-video communication, to know the person is signing a document in real time.” Witnesses can witness signings (and sign) remotely through video-conferencing. As mentioned, witnesses to a will previously had to be physically present with the testator. Under the new law, witnesses can now be remote. If an electronic will is prepared for signatures, the witnesses can simply sign the electronic will after watching the testator sign. If a paper copy is being used, then the witnesses can watch the testator sign his or her own paper copy, and then sign a separate signature page in their remote location. For paper copies, the witnesses and testator must physically compile all the signature pages within 10 days. The person appointed by the testator to compile all the signature pages must state that the signature pages were attached within 10 business days of signing and that the pages were attached to the testator’s complete and correct will for the will t be admitted to probate. So, best practice is to attach those statements to the will at the time of its signing or the time at which the master document is compiled. Wills can be signed electronically. Electronic signatures have previously not been permissible forms of signing a will. Now, however, the new Act changes everything. Testators and witnesses alike can not e-sign wills. To do so validly, the will must designate Illinois as the state of its execution, be signed by the testator or by some person at the testator’s direction and in their presence, and be attested to in the presence of the testator by two or more credible witnesses who are located in the United States at the time of execution. The change of the “presence” requirement is revolutionary, as “presence” now includes being in a different physical location from another person, but able to know the person is signing a document in real time using audio-video communication. Additional Documents, like Powers of Attorney can now be signed virtually Wills are not the only estate planning documents that require witness signatures. Powers of attorney and living wills are just as essential to creating a comprehensive estate plan. Illinois’ Electronic Wills and Remote Witnesses Act also authorizes the witnessing of any document other than a will using audio-video communication. The signatures of the principal and witnesses may be on the same or different pages provided the master document is compiled within 10 business days. While COVID-19 forced the legal industry to adjust, it appears that some of those adjustments were just what was needed to bring estate planning into the 21st century.

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