Estate Plan Adjustments for Life Changes

A well-crafted estate plan safeguards your loved ones and preserves your legacy. You can establish an estate plan anytime; the sooner you start, the greater your peace of mind. Remember, your initial estate plan isn’t set in stone; it can evolve with life changes. Let’s explore some common estate plan adjustments we frequently encounter in our practice:

Transitioning from a Last Will and Testament to a Revocable Living Trust

A will designates beneficiaries for your estate, names the executor, and appoints a guardian for minor children. It requires probate court oversight. On the other hand, a revocable living trust manages assets during your life and names a backup trustee to manage the trust should you become unable to. Further, it doesn’t require probate. If you find that your wealth has accumulated over the years or you have new loved ones to provide for, consider transitioning to this kind of trust.

Adding an Irrevocable Life Insurance Trust

If you are considering life insurance, it’s also worth looking into using an irrevocable life insurance trust (ILIT) for added protection and estate tax planning. An ILIT can own a policy, with you funding the trust to pay premiums. After death, the trust receives the policy’s death benefit, and the trustee holds and distributes the money based on your instructions in the trust document. This tool lets you omit the value of the life insurance policy and the death benefit from your taxable estate. An ILIT is also advantageous if you want to name beneficiaries for the trust who differ from the beneficiaries you name in other estate planning tools.

Naming a Standalone Retirement Trust

Are you looking to provide for minor children or family members who struggle to manage finances? Consider naming a standalone retirement trust (SRT) as the beneficiary of your retirement account. Naming an individual directly as a beneficiary will enable them to inherit the account without restriction. However, an SRT appropriately manages and protects the account from probate and creditors. A drawback is they tend to come with higher taxes.

Creating a Charitable Trust

If you wish to support a cause close to your heart while managing your tax situation, consider tools like a charitable remainder trust (CRT) or charitable lead trust (CLT). A CRT can reduce taxable income and estate tax by transferring assets to a trust that pays you income for a term, with the remainder going to charity. A CLT provides an income stream to charity for a term, with the remainder going to your beneficiaries, potentially offering tax deductions.

Including Documents to Care for Minor Children

If you still need to update your estate plan since having or adopting children, now is the time. Some states allow a separate document to nominate a guardian for your minor child, which can be easier to update than your will. Also, a temporary guardianship document or temporary power of attorney lets a designated person make decisions for your child in emergencies that lasts up to a year.

Let Law Stein Anderson Update Your Estate Plan

At Law Stein Anderson, our dedicated estate planning attorneys will accurately document your wishes to incorporate life changes into your estate plan. Contact us today if you need estate plan adjustments.