Spring Cleaning: Dusting Off Your Estate Plan

Spring has sprung! This year, the spring cleaning you need to worry about most might not be finally scrubbing down those gross shower tiles: you may need to worry about keeping your estate plan fresh.

This is because, contrary to what many assume, creating an estate plan is *not* a “one-and-done” legal activity. Major life events, shifts in financial status, and changes in the applicable law can all affect your estate plan, and those changes may require you to make some edits to your documents. So, this spring, dust off your estate plan and consider the following: 

1. Have you actually “funded” your trust yet?

Sure, you sat down with that nice attorney, they drafted up estate documents according to your meticulous instructions, and you signed on the dotted line. But if your estate plan involved the creation of a trust, your work didn’t end when you walked out of your attorney’s office with that stack of paper. In order for a trust to be effective in avoiding probate and distributing your assets as intended, you have to ensure that you funded your trust. The method of funding a trust is different depending on what assets you own, but generally, most, if not all of your assets should be tied to your trust in some way. If you are unsure if you took this step, or if you have any new assets you’ve purchased or inherited, then you should talk to your attorney about how to properly fund your trust with those assets. 

2. Have you named beneficiaries on all of your accounts?

If you own an asset in your individual name, with no beneficiaries named, then on your death your family may need to go to probate court on your behalf. In order to avoid this result, your attorney can provide you with detailed recommendations on what beneficiaries should be named on your accounts. This step can help to save your family time and money after you have passed. 

3. Have you had a child?

This seems like an obvious one, but you’d be surprised how often it bears repeating: if you’ve just had a child, either you are in need of an estate plan, or your old estate plan is out-of-date. Making sure your affairs are in order is a responsible step after you’ve had your first child. Your estate plan will allow you to: (a) appoint successor guardian(s) to be able to take care of your children if something happens to you, (b) ensure that your assets pass as intended (i.e., allows you to avoid being stuck with what the state of Illinois believes is best), and (c) potentially protect a child from inheriting a large sum of money that they are unable to manage responsibly. Even if you already have a will and trust, you should make sure to update your documents following the birth of a new child.

4. Have you bought any real estate?

If you have bought any real estate since you last signed your estate planning documents, then you may need to revise your estate plan to ensure that this new piece of real estate is not tied up in probate court following your death. If you own real estate then your real estate will often be retitled into the name of your trust(s), but some states allow you to name an individual (or individuals) to receive the property upon your death (without utilizing a trust). Either way, if you have purchased real estate then you should meet with your attorney to confirm that your property is covered. 

5. Has anyone in your family passed away?

Estate plans often have secondary beneficiaries and/or back-up plans built in, but if someone previously named in your estate plan has passed away then you should meet with your attorney to confirm that your plan still reflects your wishes.

6. Has your net worth increased significantly?

This is a big one: if your net worth has increased significantly since you completed your estate plan, then your estate plan almost certainly needs revisiting. Illinois has its own state specific estate tax, meaning that if you are approaching or over a net worth of $4 million, then you need to consider how this estate tax may affect you. Similarly, the federal estate tax exemption currently stands at $15 million per spouse, but may be sun-setting in the next couple of years to be significantly lower. Proactive planning can help you mitigate unnecessary estate taxes. 

7. Have you gotten married or divorced?

If you’ve tied the knot or left a marriage since signing your original estate plan, major revisions to your estate plan will be in order. A majority of married couples leave most assets—if not all of them—to the surviving spouse, so, if you’ve gotten divorced since signing your estate plan, then you will likely want to revisit the distribution of your estate.  Likewise, if you have gotten married then you will likely want to revamp your estate plan to provide for your new spouse. Similarly, if you are now entering into your second (or third, etc.) marriage then you will want to be clear about who should receive your assets – if you or your spouse have children from a previous marriage then you may or may not want to provide for your step-children, and careful drafting is required to ensure the proper result. 

8. How long has it been since you last signed your estate plan, and have you updated your estate plan since the new Trust Code was passed?

As of January 1, 2020, the Illinois Trust Code became the law of the land in Illinois. Depending on how long it’s been since your trust has been signed, it may be a good idea to revise your trust to ensure that your document complies with the new Trust Code. 

Ultimately, you should set a reminder to review your estate plan regularly so that your estate plan stays up to date with you and your family’s needs. The questions above are only a few of the reasons why you should review, and potentially update, your estate plan, but if it has been several years since you completed your estate plan then you should make an appointment with your attorney to review your documents. 

While estate planning can be intimidating, the Lavelle Law team makes it a priority to make the process approachable and effortless. We do the hard work for you so that you can feel confident. If you would like to schedule a free consultation to hear more about how an estate plan can benefit you and your family or to discuss possible revisions to your estate plan, please call attorney Heather A. McCollum at (847) 705-7555 or email her at hmccollum@lavellelaw.com.