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Major Life Shocks, Like COVID-19, Signal a Review of Your Estate Plan

Melissa Abbott, CPA, J.D. and Scott T. Ditman, CPA/PFS

4.27.20 | Wealth of Insights

Generally, it is recommended that you review your estate plan at year end. It is a good time to check whether any life events have taken place in the past 12 months or so that affect your plan.

However, with a life shock as monumental as the coronavirus (COVID-19) pandemic, now is a good time to review your estate planning documents to ensure that they are up to date — especially if you have not reviewed them in a number of years.

When Revisions Might Be Needed

The following list is not all-inclusive by any means, but it can give you a good idea of when estate plan revisions may be needed:

  • Your marriage, divorce, or remarriage,
  • The birth or adoption of a child, grandchild or great-grandchild,
  • The death of a spouse or another family member,
  • The illness or disability of you, your spouse, or another family member,
  • A child or grandchild reaching the age of majority, or any other change in their circumstances,
  • The sale or purchase of a principal residence or second home,
  • Your retirement or retirement of your spouse,
  • Receipt of a large gift or inheritance, and
  • Sizable changes in the value or nature and composition of the assets you own.

It’s also important to review your estate plan when there have been changes in federal or state income tax or estate tax laws. The current estate and gift tax exclusion is $11.58 million ($23.16 million for couples). Pending congressional action, these numbers are scheduled to revert to half those amounts in 2026. And they could go even lower depending upon the results of this year’s election. In addition, the tax rates could be significantly increased.

Will and Powers of Attorney

As part of your estate plan review, closely examine your will, powers of attorney, and health care directives.

If you have minor children, your will should designate a guardian to care for them should you die prematurely, as well as make certain other provisions, such as creating trusts to benefit your children until they reach the age of majority, or perhaps even longer.

A durable power of attorney authorizes someone to handle your financial affairs if you are disabled or otherwise unable to act. Likewise, a medical durable power of attorney authorizes someone to handle your medical decision making if you are disabled or unable to act. The powers of attorney expire upon your death.

Typically, these powers of attorney are coordinated with a living will and other health care directives. A living will spells out your wishes concerning life-sustaining measures in the event of a terminal illness. It says what measures should be used, withheld or withdrawn.

Changes in your family or your personal circumstances might cause you to want to change beneficiaries, guardians or power-of-attorney agents you have previously named.

Life Insurance

Now is also a good time to review your existing life insurance policies. It is important to determine whether you have the proper coverage to address potential estate liquidity needs.

Find Calm in the Middle of a Storm

In the midst of the COVID-19 crisis, many people’s thoughts are turning to their families. Updating and revising your estate plan today can provide you peace of mind that your loved ones will be taken care of in the future. Contact Melissa Abbott at 212-331-7424 | mabbott@berdonllp.com,  Scott Ditman at 212-331-7464 | sditman@berdonllp.com or your Berdon advisor and your trust and estate attorney.

For more information on this topic or any other matter related to the COVID-19 pandemic, please contact your Berdon Advisor.

Berdon LLP New York Accountants