Why it is important to update an estate plan

People in New Jersey who have created an estate plan may want to review that plan. In December, Congress passed a law that changed the amount of the estate plan exemption from $11 million for couples to $22 million. This means that people who have created trusts and used other tools to avoid estate tax may want to review their plans and see if those tools are still necessary. However, there are reasons that everyone should review an estate plan regularly even if the estate is a much smaller one.

Estate planning includes preparing documents that deal with what happens if a person becomes incapacitated. These include health and financial powers of attorney, which appoint people to manage a person's health care and finances. Individuals should review these to make sure they are still satisfied with whom they have chosen for these roles.

Another type of document to review is the beneficiary designation. These are used to pass on assets such as retirement accounts and insurance policies. It can be easy to fill these out and forget about them despite life changes like marriage or divorce. Reviewing an estate plan may also lead to the realization that there are better tools for achieving certain goals. For example, a trust can be used to care for a loved one with special needs.

An attorney may be able to review the tools that are available in estate planning based on a person's needs. For example, one reason estate planning is important for parents of minor children is that a will can appoint a guardian for the children in case of the parents' deaths. Otherwise, a guardian would be appointed by a judge. While reviewing an estate plan, people should discuss the plan with loved ones if possible to reduce the likelihood that it will be challenged or misunderstood.

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