• Please search to find attorneys
Close Btn



Annual Estate Plan Review Checklist

With 2021 coming to a close, many of us start thinking of items we wanted to get done this year. For many, getting their estate plan in order is one of those items. Year-end is a great time to reflect on life changes that happened over the past twelve months to ensure your estate plan adequately meets your needs and concerns. Here are some items to consider as your review these documents:

  • Fiduciary Appointments for Financial Decisions

Is the Successor Trustee of your Revocable Trust, Personal Representative under your Will, and Agent under your Financial and/or Gift Power of Attorney the person you want to make financial decisions for you in the event of your death or incapacity?

  • Health Care Power of Attorney Appointment

Is the individual designated as your Health Care Power of Attorney the person you want making medical decisions for you in the event of your incapacity, and also making end of life decisions for you in the event you are diagnosed with a terminal condition and in an irreversible coma?

  • Guardian Appointment

If you have minor children, does your Will designate a Guardian, and if so, is it the individual you want raising your children in the event of your premature death?

  • Asset Titling

If you have a Revocable Trust, are all of your assets owned by your Revocable Trust, or is the Revocable Trust designated as the payable-on-death beneficiary (e.g., retirement benefits, annuities and life insurance)? Pay special attention if you bought a new house or car this year to make sure you took title to these assets properly. As you receive tax statements in the mail over the next few months, this is also a good opportunity to confirm proper titling of assets.

  • Major Life Events

Did you get married or divorced this year? Did you have a child or grandchild? Did a child get married or divorced? Has your health changed in a material way? Major life events like these often warrant an estate plan update.

  • Dispositive Provisions in Revocable Trust

Does your Revocable Trust provide for the correct timing of distributions to your beneficiaries? Are your beneficiaries ready to receive outright control of their inheritance, or should a Trustee manage those funds until they are older?

  • Family Business Interests / Farmland

Does your Revocable Trust appropriately dispose of family business interests and/or farmland? Your Trust may need to grant a child involved in the family business an option or a right of first refusal to purchase any business interests or real estate from his or her siblings not involved in the family business. To that end, a Buy-Sell Agreement should be implemented if there are multiple owners of the family business, or if there will be multiple owners after a death. You can learn more about Buy-Sell Agreements in our article titled “Protecting Yourself and Your Business With A Buy-Sell Agreement” found here on our website.

  • Special Considerations

Did any other life events happen that your estate plan needs to address? For instance, if a beneficiary of your trust is now receiving government benefits as the result of a disability, you may need to implement a supplemental needs trust in order to not displace those government benefits.

  • Age of Estate Plan

When was your estate plan most recently updated? If it has been a number of years, it would be a good idea to have your plan reviewed by your attorney to make sure it addresses any legal changes, even if there are no changes needed to address family tax or business circumstances.

  • Estate Tax Planning

The federal estate tax exemption amount represents the amount a person may pass to his or her heirs, or a trust for their benefit, free of the federal estate tax. In 2021, the federal estate tax exemption amount is $11,700,000 per individual or $23,400,000 per married couple (indexed annually for inflation). In 2022, these amounts are $12,060,000 and $24,120,000, respectively, as a result of inflation adjustments. These amounts are scheduled to decrease to $5,000,000 and $10,000,000, respectively, in 2026 (however, these amounts should be adjusted for inflation since 2011). Assets over the exemption amounts will be subject to the federal estate tax, currently forty percent (40%). However, in general, the current administration and other Democratic leaders support a reduction in the federal estate tax exemptions and increasing the tax rate. While it is difficult to predict possible future legislation, most proposals support exemptions between $3,500,000 and $5,000,000 per person. Some other proposals have suggested a progressive rate structure which would increase tax rates to levels above 50% at certain asset levels.

If your net worth is near or above the current federal estate tax exemption amounts, you should discuss ways to help minimize any federal estate tax with your estate planning attorney. This is particularly true if you are interested in utilizing some of your current $11,700,000 exemption amount while available.

If you would like to make any changes to your estate plan, or discuss any of these checklist items further, please contact any member of the McGrath North Tax and Estate Planning Practice Group.