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Why 2020 Is a Great Time to Review Your Will & Estate Plan

| Jan 6, 2020 | Firm News |

It’s a new decade! So is it time to visit your attorney to review/update your estate plan? Why, you may ask? Because we all need to plan to take care of ourselves while we are alive. Estate planning is not just for when we die, but to help us and our loved ones live the best life possible. Our lawyers at Duffy North have seen too many cases where bad things have happened because people did not plan or did not keep their plan updated. Like, the client who was in a car accident that left him in a coma for 40 days. He hadn’t reviewed his estate planning documents and his ex-wife was the primary agent under his Power of Attorney. Or the case where our clients’ wife had a stroke and ended up non-communicative in nursing care. Due to the costs of her care, the husband could no longer afford the mortgage and their home went into foreclosure. He could not sell it because his wife could not sign the deed and they never signed Powers of Attorney. So, he couldn’t sign it for her either. Thousands of dollars in court costs and attorney fees later, a Guardian was appointed. Eventually, the court approved the terms of the sale so the house could be sold, but under distress and at a great loss.

Meet with an Estate Planning Attorney Today

No experienced attorney wants to go meet with a client in a hospital or nursing home to talk about planning and then try to have documents prepared and rush back to have them signed. Or worse, tell the family that the client does not have the mental capacity to sign documents and a guardianship will be required. That is why now is a great time to consult with one of our estate planning attorneys to ensure you have:

  • A good plan in place. Including but not limited to a Healthcare Power of Attorney, Living Will, and a Financial Power of Attorney.
  • The right people for the job named in any existing plan.
  • A Will that works with all your other assets which will pass outside probate to ensure the smoothest transition on your passing to the right people in the right amounts.

Remember, just because you are married that does not mean your spouse can sign legally on your behalf if you are incapacitated. You need to have named him/her as agent under a Power of Attorney.

When Was the Last Time You Updated Your Estate Plan?

So…let me guess? You have already done your estate planning documents – but that was 20 years ago. You named your spouse – but are now divorced. You named your sister as executor – but she now lives in Hawaii. You named your two children – but they are no longer speaking to each other. And let’s not forget to mention all the changes in laws over the last 20 years. Or, 20 years ago, you created a living trust and transferred title to all your property into it, but since then you sold your house and bought another and did not title it in the trust. Or you have changed banks and the trust (or your Will) was written when the Federal Estate Tax affected estates greater than $675,000 (today it only effects those greater than $11,500,000.) But what if you already have a Will and the executor is your wife? So why do you need to review it with your attorney? Because more and more today, property doesn’t pass at death under the direction of the will but by direct transfer on death. Such as an IRA or life insurance to the named beneficiary, or a joint bank account to the joint owner. These designations result in property passing at death in ways you did not intend. One of our attorneys wrote a Will for a client that left her estate equally to her two children. “Someone” told her she could avoid that dreaded probate process by making all her CDs payable on death to her children so, she named one-half to pass to her son and one-half to pass to her daughter. But, during her lifetime she cashed in CDs in the name of her daughter when she needed money. When the mom died, her son received 80% of the estate and daughter 20%, despite having a Will directing her estate to pass her property equally to the son and daughter. A review by mom with her attorney could have avoided this unintended outcome. And if all the above is not enough reason to review your estate plan with your attorney, a law passed by Congress and signed by the President in December 2019, will take effect, making significant changes to your IRA, 401(k), 403(b), and other tax-deferred retirement monies. Here is how the new law will impact your estate plan:

  • Participants reaching age 70 ½ in 2020 and beyond have additional time before they must take required minimum distributions (RMDs). The new law allows these individuals to delay RMDs until April 1 of the year following the year in which they turn 72. Those who have already turned 70 ½ must continue to take RMDs as required under the old law.
  • The old so-called “stretch IRA” rules (that applied equally to defined contribution plans) have been eliminated effective for deaths occurring after 2019. Participants who named beneficiaries with the goal of delaying taxation to the maximum extent possible will want to reevaluate their beneficiary designations.
  • Starting in 2020, most individuals inheriting an IRA or a defined contribution plan account must generally receive the payments within 10 years.
  • Participants are entitled to penalty-free withdrawals of up to $5,000 for each new baby or adoption and can pay these amounts back indefinitely to the plan that made the distribution or to an IRA.
  • Participants in defined benefit plans, money purchase plans, or governmental 457(b) plans may be entitled to in-service withdrawals at the new, lower age of 59 ½, should the plan allow.

We Are Here to Guide You!

Are you ready to review your estate plan with a lawyer at Duffy North? If so, stop by our law firm today to speak with one of our seasoned estate planning lawyers about your situation. We know how important it is to plan for your future so you can protect your legacy. Whether you need to draft a Will or establish a new trust for your child, we will gladly walk you through each step of the legal process. Give us a call today at 215-914-9939 to set up your consultation with our legal team.