There are many reasons why it is crucial to have your estate plan reviewed. A proper estate plan must be modified to account for legal and tax changes, as well as life changes.
"While certain basic principles have held true over the years, new strategies are constantly developed and legislative changes alter the law and how it is applied. Proper estate planning is rarely a one-time event. Besides accounting for legal changes, the plan must be modified to account for life changes — birth, death, divorce, finances and health" -- Bonnie Kraham, Elder Law Attorney
"There is a tendency to view elder law estate planning as a static process resulting in a permanent portfolio. Both are misconceptions.
While certain basic principles have held true over the years, new strategies are constantly developed and legislative changes alter the law and how it is applied. Proper estate planning is rarely a one-time event. Besides accounting for legal changes, the plan must be modified to account for life changes — birth, death, divorce, finances and health.
Also, when a plan is created poorly the first time, often by those without direct experience in this area of the law, it is often necessary for those more experienced in elder law estate planning to fix the "broken" plan.
One of the more common errors we see is a purported MAPT, a Medicaid asset protection trust, that does not comply with Medicaid law. Sometimes, such a trust states that the grantors (Mom and/or Dad) are also the trustees, which is not allowed. Other times, the trust gives the grantors access to principal in trust assets. This also is not allowed.
The common fix for a defective MAPT is creating a new one that follows the law: The grantors may not be trustees, and the grantors have a right to income only from trust assets. They have no right to principal. The downside of starting over is that the five-year "look-back" period must lapse before the assets in the trust are protected. However, the current situation must be assessed to determine if the new MAPT makes sense.
Even the best of plans may be obsolete by the time they are needed, sometimes many years later. At a minimum, an estate plan should be reviewed every three years to see if any life or law changes affect it.
Over time, clients may want to change their backup trustees or plan of asset distribution. They may wish to add inheritance trusts to keep assets in the family. They might wish to change from a revocable trust to the MAPT because they were unable or unwilling to obtain adequate long-term care insurance. Assets for married couples may have grown to more than $1 million and the couple may need estate tax protection.
A systematic updating approach allows the client to have a plan better suited to their current needs. Periodic review reduces the chance of broken elder law estate plans.
If you're competent, you can always update your plan by either amending a trust or signing a new will, power of attorney or health care proxy.
If you are not competent but have an elder law power of attorney with broad gifting powers, your agent under the power of attorney may create, amend or revoke a trust, and make other changes in your best interest, including protecting assets from nursing home costs. The goal is to avoid the last resort, which is a court proceeding to fix a broken plan, or worse, having a plan whose purpose is defeated."Article Reference:"Protecting Your Future: Revise Estate Plans Regularly to Meet Needs" by Bonnie KrahamLink: http://www.recordonline.com
At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.
Research shows that 86% of trusts don’t work. That’s why we developed our Unique Self-Guided 19-Point Trust, Estate, & Asset Protection Legal Guide, so you can learn where problems may exist in your planning as well as opportunities for improvement and how to implement a plan to protect your spouse, home, family, and life savings.
We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com.