National Estate Planning Awareness Week Blog Series – Post 3

Oct 17, 2018

National Estate Planning Awareness Week

More than half of all Americans lack essential estate planning documents (2017 Survey by Caring.com).  If you don’t yet have your estate plan in order, now may be a great time to get started.  National Estate Planning Awareness Week is October 15th through the 21st.  In recognition of National Estate Planning Awareness Week, five MWB Trusts & Estates attorneys are posting a series of blogs designed to help explain the who, what, when, why, and how of estate planning.  We hope the articles encourage you to face the hard questions, make difficult decisions, and take action with respect to your own estate plan. By doing so, you create peace of mind for yourself and your family.

We encourage you to share this valuable information with your family, friends, and colleagues.  Please see the McGuire Wood & Bissette website for more information on our attorneys and service areas.

October 17, 2018 – Today’s second post is from Harris Livingstain.

BIRTH, MARRIAGE, DIVORCE, DISABILITY & DEATH

These seminal life-cycle events (the “Big Five”) have one thing in common that are not at the forefront of most of our minds…… unless your mind is within the body of an estate planning attorney.   Yes, we estate planning attorneys have this unique ability to step outside the realm of normal human reaction to these emotionally-charged events and convert them into a paper on estate planning “opportunities.”

Seriously, however, once you have finished the agonizing process of confronting your mortality, meeting with your estate planning attorney (and hopefully your other professional advisors that should be part of the “team”), reviewing drafts and then executing your Will (and maybe a revocable e trust agreement), powers of attorney, beneficiary designations and other documents that may be part of your personal estate plan at that time, you then get more opportunities to relive that experience. Each of these Big Five events, whether they happen to you, your child or grandchild or other person(s) who may be the beneficiary(ies) of your estate, should trigger a not-so-fleeting thought of “how does this impact my estate plan?”

The birth or marriage of a child or grandchild may invoke thoughts of a trust for their benefit until deemed mature enough to handle the funds, or to protect the funds from their divorce or creditor issues.   If you or a child/grandchild get divorced there may be provisions contained in your estate planning documents that may refer to a spouse as a beneficiary. The laws of many states provide that divorce terminates rights to inherit under will or certain trust laws, but what about life insurance or retirement plan beneficiary designation? What about the period (1 year in North Carolina) between separation and divorce?   If a child or grandchild becomes disabled, what provisions in your estate plan may need to be revisited? Is the child an executor, trustee or agent under a power of attorney?   Do I need to consider a trust for his or her benefit rather than an outright receipt of funds, and if the child or grandchild qualifies for state or federal benefits, what do I need to do to make he or she continues to qualify?  The death of a child who may not have been able to provide sufficiently for his spouse/children also may suggest a need to revisit your estate plan. These are only a sample of the issues that may arise with a Big Five event, and your estate planning team can oftentimes present you with a few manageable options. But, the onus is on you to begin the discussion.  

Although not a Big Five event, but one that should be mentioned, is the mere passage of time. Laws change, whether they be federal tax laws or state laws, and the impact on your estate plan drafted at a prior time can be impacted merely by the way the plan is drafted that contain provisions dependent on prior law.   Trusts that were created as “irrevocable” can now be modified under North Carolina law to take into changes in circumstances that existed at the time the trust was created.  

Bottom line – try and overcome avoidance behavior and recognize that the estate plan that you invested a great deal of time, effort, emotion and money may be compromised if not reviewed in the context of a Big Five event.

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