When a new year rolls around, people make resolutions of various kinds. Some of them are related to bad habits, and you may resolve to take care of a responsibility that you have been putting on the back burner.
With this in mind, we urge you to make 2021 the year that you finally put an estate plan in place.
If you are going through life without an estate plan, you are making a mistake, but you are certainly not alone. Caring.com has been conducting annual surveys to get a feel for the estate planning preparedness of American adults, and the numbers are going in the wrong direction.
Back in 2017, 42 percent of respondents said that they had estate plans in place. In 2020, the number was just 32 percent, and it is not strictly driven by very young adults.
Just over 27 percent of people between the ages of 35 and 54 had estate plans in place, and the figure was 47.9 percent for folks that are 55 years of age and older.
The parents of dependent children are typically between 25 and 54, and most of these people are married or in a committed relationship. A small minority of these individuals have estate plans when they have partners and children that are relying on them.
This is a major mistake, because life is fragile, and anything can happen to anyone at any time.
You should certainly make sure that you are carrying sufficient life insurance if you have others depending on you, and you should facilitate smooth property transfers. If you are a parent, you should designate a guardian for your children in your estate plan.
Another piece of the puzzle that many people overlook is the incapacity planning component. Your plan should include a living will to record your life-support preferences, and you can name someone to make medical decisions on your behalf in a durable power of attorney.
When you take the right steps, you can go forward with the knowledge that your loved ones will not be left high and dry if something happens to you.
The initial estate plan that you put in place when you are relatively young will be based on a snapshot of your life at that time, but we live in moving pictures. Things change as time goes on, and evolving circumstances will lead to the need for estate plan adjustments.
You may have additions to the family, and changes in marital status are not entirely uncommon. Your financial situation is likely to improve over the years, and this can be another factor that triggers the need for an estate plan update.
Laws that are relevant to estate planning are subject to change, and this is an ongoing reality. To provide an example, the estate tax exclusion is the amount that can be transferred before the federal estate tax would be levied on the remainder.
In 2001, the exclusion was $675,000, but there have been seven increases since then. The exclusion will be $11.7 million in 2021, but it is scheduled to go back down to $5 million adjusted for inflation in 2026.
That is quite a roller coaster, and this is just one of many different laws that can be changed via legislative mandate. As a response to these external scenarios and your own life changes, you should schedule regular estate plan reviews to keep your estate plan up-to-date at all times.
We Are Here to Help!
If you are willing to make this important resolution, there is no time like the present. We can gain an understanding of your situation, explain your options, and help you develop a custom crafted plan that is ideal for you and your family.
You can schedule a consultation appointment if you give us a call at 310-337-7696, and you can fill out our contact form if you would prefer to send us a message.