You should periodically review your estate plan to make sure it reflects your current wishes. Failing to address changes in the law or in your financial and family situations can result in unnecessary taxes, family conflicts, and unintended people receiving a significant part of your estate. If any of the following events occur, you should make certain to review your estate plan:
If your children are still young (even if they are not minors) and maybe not responsible enough to handle a large sum of money, it might not be in their best interest to leave them their share outright. Without proper planning you could end up leaving thousands of dollars that your children may spend as they see fit. To adequately address this scenario, your estate planning documents may provide that if any of your estate passes to someone who is under 30 or 35, it should be held in trust for them and paid out at predetermined ages. For example, one-third may be paid at age 25, one-half at age 30 and the balance at 35. You should have language in your documents stating that during the term of the trust, income and principal should be paid to your children for their health, education, support and other legitimate purposes.
Assets, such as life insurance policies and IRAs, pass directly to the recipients you specify on your beneficiary designations. Other assets pass by right of survivorship, such as bank accounts or real property held as joint tenants with right of survivorship. Assets such as these pass according to the beneficiary designation or the surviving joint tenant, regardless of the provisions of your will. For example, if you intend to leave a joint bank account to all of your children but you only designated one child as a joint owner of the account, that child does not have the legal obligation to give his or her siblings an equal share of the account.
If you currently own a business that you want to pass down to your children or grandchildren, you need to address business succession as part of your estate plan. Family owned businesses have only a 30% chance of surviving when passed from the first to the second generation, and that survival rate drops drastically as it passes to future generations. In order to plan for succession of your business to future generations, tax and non-tax considerations should be considered as part of your planning. A properly drafted plan will assure that your business continues for future generations.
If you have a disabled child who is receiving government benefits, such as Medicaid, and your current plan leaves him or her money outright, or in a trust without the required language protecting the benefits, you may disqualify him or her, either temporarily or permanently, from receiving future benefits. To avoid the loss of benefits, your child’s potential inheritance should be placed in a Supplemental Need Trust (SNT). An SNT will guarantee that your child will still receive government benefits, while providing for his or her additional needs through distributions from the SNT.
This list covers only some of the most common mistakes that our firm has observed when meeting with potential New Hampshire estate planning clients. However, Nashua based estate planning attorneys provide a comprehensive estate planning review to address many other issues. Please contact Attorneys John S. Polgrean at [email protected] or (603) 883-0797 if you or a family member has questions about your current estate plan or if you would like to arrange a free initial consultation.
This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.
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