financialforum Estate-Plan Update
Review your estate plan every few years to ensure you and your family are protected. Phil Dyer, CFP, discusses which documents are important to keep up-to-date.
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More Estate-Tax Changes to Come?
■ Most experts expect some action on the federal estate tax in 2010, so stay alert for changes and be ready to act as needed.
ow often should you update your estate plan? The answer might surprise you. According to an
estate-planning attorney in the Washington, D.C., area, “Any estate plan that has not been updated in the last four to five years is seri- ously out of date. Significant changes in the federal estate tax laws, many state estate/ inheritance tax laws, and [federal privacy] requirements for health care directives mean that older documents might not offer the maximum protection [you need].” While basic estate plans get reviewed
fairly routinely when servicemembers are on active duty, I often see second-career and fully retired servicemembers whose wills are 20 or more years old and who lack other critical documents, such as living wills and health care powers of attorney. You should have the following: Valid will: Older wills still can be valid,
but you want to ensure whomever you have chosen to be your personal representative (also called executor or executrix) still is willing and able to serve. You also should review your will after key life events, such as the death of a spouse, a divorce, a remar- riage, or the birth or adoption of a child. Living will: Having a valid living will —
which makes known your wishes about extraordinary life-support measures — is critical. Communicating your preferences in advance to your family and physician can prevent significant heartache and expense. Health care power of attorney (HCPOA):
If you are sick or injured and unable to communicate with your medical team, an
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HCPOA nominates someone to make key medical decisions on your behalf. (Note: In many jurisdictions, a living will and HCPOA are combined into a single document, called an advanced directive for health care.) Depending on your financial situation,
your marital status, and the state in which you reside, you also might need additional estate-planning tools, including: Revocable living trust (RLT): This docu-
ment is very useful for avoiding probate fees, speeding up asset transfers, and plan- ning for incapacity. An RLT is particularly useful in states with high probate fees or an onerous probate process, if you own real property in several states, or if you have a blended family. A key feature of an RLT is that, after creation, the trust must be prop- erly funded by retitling assets into the trust. Credit shelter trust: Though the federal
estate tax currently has been repealed, it’s due to come back in 2011 with a thresh- old of $1 million. In addition, 11 states still have a state inheritance or estate tax (Con- necticut, Indiana, Iowa, Kansas, Kentucky, Maryland, Nebraska, New Jersey, Oregon, Pennsylvania, and Tennessee). Married couples can use a credit shelter trust to double their state (and federal, if reinstated) estate-tax exemption in most cases.
MO
— Former Army Capt. Phil Dyer, CFP®, is deputy director, Benefits Information and Finan- cial Education. To find a financial planner near you, contact Garrett Planning Network at (866) MOAA-GPN (662-2476) or
www.moaa .org/garrett, or visit
www.moaa.org/financial center for other resources.
PHOTO: SEAN SHANAHAN
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