When to Update Estate Planning Documents

When you execute an estate plan, chances are you’re enthusiastic about how well your plan is going to work for you and relieved to have what is often an unpleasant task out of the way.  Once you get home, you may place the estate planning portfolio in your safe or a safe deposit box at the bank, so that the documents are accessible and won’t be inadvertently destroyed.  Unfortunately, that is often the last time that most people give serious thought to their estate plan.  While most people may not need to update their estate plan every year or even every two or three years, it is important that you review your plan on a regular basis to make sure that it does not need to be changed or updated.

There are many factors that can cause someone to need to update their estate planning documents.  For example, if you have children, you will need to change your will to appoint a guardian who would care for your child if you and your spouse were to pass away. If you go through a divorce or separation, you will obviously need to change your estate plan to protect your assets from your ex-spouse. If you are older and have grandchildren, you may want to update your plan to include your grandchildren (or even great-grandchildren).

Surprisingly, many of our older clients come to us with estate plans that they executed twenty or more years ago when their children were little.  When they come to us, often their children are not only grown, but have children of their own.  If these clients have a will appointing guardians for their children, their estate plan is not only out-of-date but includes unnecessary provisions.  This framework will no longer work to accomplish the goals and serve the needs of our clients.

Aside from inheritance issues, which can usually be fixed with a simple change to an already established estate plan, some estate plans may need to be reworked entirely.  If you made your estate plan when you were younger, chances are you were not concerned about qualifying for Medicaid or veterans’ benefits.  However, if you are retired or approaching the age of retirement, you may want to consider an irrevocable trust in order to protect your assets from a Medicaid spend-down.  This type of estate plan is much more complex than having a simple will, which is the most common type of estate plan, and requires a reworking of the way your assets are titled as well as a change to almost all of your estate planning documents. 

Additionally, if you signed your estate planning documents in the 1990s, you may have a trust that was drafted with the goal of allowing your estate to avoid estate tax. In the 1990s, the estate tax exemption was $600,000. That means that anyone with an estate worth $600,000 or more would have an estate subject to estate taxes. Many attorneys crafted unique estate plans and complex trusts to allow their clients’ estates to avoid having to pay estate taxes. However, in 2019, the estate tax exclusion is $11.4 million per individual and $22.8 million per married couple. This means that a great number of people currently do not have to plan for the avoidance of estate tax, because they do not have what is called a taxable estate. For people who had complex trusts drafted to avoid estate taxes, their estate plan is likely much too complicated for what they currently need. These documents should be updated to reflect the current law.

The final reason that an estate plan would need to be updated is if there is a major change in the law that would change the way certain documents operate.   For example, in 2010, Virginia passed the Uniform Power of Attorney Act. This act created a new format for durable powers of attorney that was designed to make these documents more readily acceptable by financial institutions.  If it has been a few years since you executed your estate plan, it is important to verify that there have been no changes in the law that would warrant a change to your estate plan.

While some changes, such as death and divorce, make it obvious that your estate plan needs to be updated, there are other issues, such as changes in the law, of which you might not be aware. Having an estate plan that is outdated or no longer accomplishes your goals can be almost as bad as not having an estate plan at all. For these reasons, it is important to contact your estate planning attorney on an annual basis to make sure that your plan is still working the way you wanted it to and that no changes need to be made.

Ask Kit Kat: Bahamas’ Heroine

Hook Law Center: Kit Kat, what can you tell us about the woman from the Bahamas who rescued 97 dogs during Hurricane Dorian?

Kit Kat: Well, this truly is a remarkable story. While it was not an unusually large house, she managed to cram 79 of them in her master bedroom. The rest were in other areas of her house. She had a few dog crates donated by neighbors for those who were really scared or sick and needed to be left alone. Her name is Chella Phillips. She had help from her brother. He slept only an hour during the worst of the storm, and Chella didn’t sleep at all.

During the initial parts of the storm while she still had electricity, she played music, had the TV on, as well as air conditioning. Eventually, she, too, lost power. Her house, which was already a refuge for stray dogs before the hurricane, started to flood. Attempting to keep the house and the dogs dry was quite an effort! While she still had power, she communicated with people through Facebook. Her concern was always for the dogs, “I pray for the other islands who have unimaginable damages and I don’t see how any dogs or any living being could have survived outside. My heart goes out to them.”

Ms. Phillips operates a shelter in Nassau, Bahamas called “The Voiceless Dogs of Nassau, Bahamas.” In August, long before there was any knowledge of Dorian, she had raised $63,000 for her shelter. This surpassed her original goal of $20,000. She has taken in close to 1,000 dogs since its opening. She is truly a heroine in every sense of the word! (Hannah Natanson, “This woman took 97 rescue dogs into her Bahamas home to protect them from Hurricane Dorian,” The Washington Post, Sep.3, 2019)