As we get ready to turn the page
from 2012 to 2013, it is not a bad time to focus on your Rule Book (the set of
documents in which you lay out your estate plan) and make sure that the rules you
have in place are still consistent with your wishes and your needs. How often you review your Rule Book is up to
you, but it is important to appreciate that things change. As they do, your Rule Book can gradually
become obsolete, and if you fail to update it, it may do more harm than good.
What kinds of changes
impact your estate plan?
Changes
in your health.
Like it or not, your health will change over time, and the general trend
will not be for the better. Your doctors
can do a lot to keep you going, but they have not discovered the Fountain of
Youth yet. If you ever lose the capacity
to update your estate plan, your family may be stuck with a Rule Book that does
not meet your needs, and there may be little that can be done about it, short
of taking an expensive foray through the court system.
Changes
in your assets.
Values go up, values go down.
Those fluctuations can affect how your estate plan works. More importantly, it is important to take
periodic stock of your assets and make sure they are all properly titled. If you have a revocable living trust, you
probably should have all or most of your assets in the name of your trust. If you sell an asset that belongs to your
trust, make sure the proceeds go into an account owned by your trust, and when
the proceeds are reinvested, make sure the new assets are properly titled.
Changes
in your family situation.
Any time your family experiences a marriage, a divorce, a birth, or a
death, you should have a look at your Rule Book. Other changes might impact what you want to
say in your Rule Book as well. Those
changes might be good, such as a child heading off to college, or not so good,
such as the discovery that a family member has a drug problem or a debt
problem.
Changes
in the law. There have been some dramatic changes in the
Federal and Hawaii estate tax laws over the past several years, and you can
expect those kinds of changes to continue for the foreseeable future. Though the changes have caused uncertainty,
they have also given rise to opportunities.
Over the past two years, Hawaii laws relating to trusts and tenancy by
the entirety have changed in some very positive ways that open the door to
enhanced asset preservation. Don’t miss
out on what those new laws have to offer.
If you review your Rule
Book at least once per year, you will probably be able to stay on top of all of
these changes and be able to make appropriate updates to your estate plan. You should also sign a new durable power of
attorney and advance health-care directive each year, even if there are no
changes. The reason to update your power
of attorney is that once it is more than a year old, many financial
institutions will not honor it, and once it is five years old, nobody will
honor it. The reason to update your
advance directive is to force you to focus on it and make sure that it
accurately reflects your wishes. It will
not be called upon until you are unable to speak for yourself, so you need to
get it right while you still have the capacity to do so.