Annual Review

The estate planning process involves contemplating mortality, trying to decide how to provide for loved ones, and grappling with potential tax consequences.  It means finding a lawyer who is competent, empathetic, and responsive.  Sometimes it means having difficult family meetings.  Small wonder, then, that so many people haven’t addressed their estate planning needs. But even those who have grappled with these problems and gone through a comprehensive planning process may not be finished. They must ensure assets are transferred to recommended accounts or trust structures.

Clients need to review all assets in light of their estate plan every year to ensure that these problems won’t arise death.

You can guide clients on the review by undertaking the following steps:

  • Build a comprehensive personal balance sheet. Make a list of all of assets, including life insurance and retirement plans.  In a separate column next to that list, indicate the way in which each assets is held: for instance, “trustee”, “individually”, “joint tenants with right of survivorship”, and so forth.  For any beneficiary designation property (life insurance, retirement plans, and corporate benefits), list who is named as primary and secondary beneficiaries.
  • Determine the estate plan. What kind of estate planning documents are in place? A will?  A revocable trust? Nothing? Again, nothing may be a perfectly reasonable answer for younger professionals who don’t have children.
  • Compare asset titling with the plan. It should become apparent pretty quickly if there are gaps.  For example, if there is a revocable living trust but assets are owned in your client’s own name, generally there will be a problem.
  • Retitle your assets. Not all apparent inconsistencies are actual problems.  For example, many estate plans leave property to a spouse in trust, rather than outright, but intentionally name the spouse as the outright beneficiary on retirement plans because there are income tax benefits in doing so.  Before making any changes, clients should check with an estate planning adviser or fiduciary professional to confirm that a change should be made to the titling of the assets.