Tuesday, January 31, 2017
Estate Planning Laws | Enactment of New Law Reminds Us of the Importance of Estate Plan Reviews
Summary: Very little in life is unchanging. The relationships in our lives change through death, birth, marriage and divorce, among other things. The laws change through the passage and enactment of new bills. Whether it is a new law or a life-event change, it can have an impact on your estate plan. With periodic estate plan reviews, you can gain the peace-of-mind that comes from knowing that your plan remains optimized to function at its best possible level, even after taking into account all of the changes in the law and your life that have taken place.
Back in late May 2016, Minnesota Governor Mark Dayton signed a bill into law. The signing probably was not headlines news, even in that state. But, for Minnesota pet owners, it was welcome news. With the governor's signature, Minnesota became the 50th and final state to recognize the legal validity of pet or animal trusts. Pet or animal trusts work similarly to most every other kind of trust. They allow an animal owner, whether the beneficiary is your pampered poodle or a working animal like a horse, to establish the trust agreement with that animal (or animals) as the beneficiary. The trust creator then names a trustee who manages the trust assets and the income from those assets for the benefit of that named beneficiary. With this kind of estate planning, you can ensure, not only that your animal will go to a loving home, but that the animal will have the financial resources he or she needs.
Transfer on death deeds are a useful tool for some people who may desire to avoid probate but whose circumstances may dictate that a revocable living trust isn't right for them. These deeds work like the death beneficiary designations on your life insurance or other financial accounts. With proof of a valid transfer on death deed, along with evidence that you're the beneficiary and the previous owner has died, you can take immediate ownership of a piece of real property without requiring a probate process. More than half of the 50 states recognize these deeds. Missouri has had them since 1989. California, however, passed a new law and began recognizing them in 2016.
What do these sets of facts have in common? They are both reminders that the laws governing estate planning are not etched in stone. They change with some frequency. Some of the changes may be very minor. Others, like the creation of a new type of trust or new type of real estate deed, can be major. Regardless of whether a change created by a new law is minute or large-scale, any change can have an impact on your plan.
A few years ago, Indiana law created a legally enforceable "Funeral Planning Directive." If you lived in Indiana and decisions like place of burial or cremation-versus-interment mattered to you, this change would be enormous to you. If, however, you had already created your Indiana estate plan before the new law passed and you thought that your were all finished with your estate planning, you might have had the potential of missing out on the benefits of this change in the law. The same is true if you, as a pet owner, had already created your Minnesota estate plan before May 2016 and ceased doing anything with your plan after you signed it.
A popular modern social media acronym is "FOMO," which is short for "fear of missing out." As someone with an estate plan, you should have FOMO -- fear of missing out on the benefits of potentially helpful changes in the law, or fear of missing out on having an optimized estate plan because you did not update your plan to account for shifts in the law or changes in your personal life. With periodic estate plan reviews, you need not have this fear, however. A routine estate plan review can help you identify life-event changes, such as marriages, divorces, deaths or births, which may indicate a need for an amendment to your plan. Reviews may also allow your estate planning team to notify you that a law has changed, and give you the opportunity to discuss with your estate planning attorney how these changes may impact your plan.
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