Debunking the ‘Set-It-and-Forget-It’ Myth

[00:00:00] Atty. James Jones: Welcome to Legacy Talk. I’m your host, James Jones. I’m an estate planning and probate attorney in Tacoma, Washington. I’ve been practicing for over 20 years, and my main practice areas include estate planning, probate, and estate administration. On Legacy Talk, we discuss topics surrounding families and estates.

[00:00:18] Estate planning is often a confusing and complicated topic. But my goal with this podcast is to make it understandable and accessible to those who need it. So if this is something that interests you, I’d appreciate it if you click the subscribe button and like this episode so that you can follow along as we break down the barriers to estate planning.

[00:00:39] I’m excited to get today’s to today’s topic. Today’s topic is I’ve Made An Estate Plan Now I Can Forget It Debunking The Set It And Forget It Myth. Because making sure your estate plan still represents what you want to have happen with your estate is part of a robust estate plan. So on today’s show [00:01:00] we’re talking about I’ve made an estate plan now I can forget it debunking the set up and forget it myth.

[00:01:06] So let’s get to it. So I’ve been practicing for 20 years, 21 years and over that period of time, one of the most common questions or statements I get from clients when we’re finished signing estate planning documents is, so I’m all done now, right? Nothing more that I need to do. I check the box, right?

[00:01:24] And this implies that they’re done with their estate plan. There’s nothing left to do, right? Like I’ve done it all. I can die happy now, 50 years from now or 40, 20 years, right? 10 years. For some, it can be right. Sometimes it is. Right? But for most an estate plan in order to be remain effective, should be reviewed regularly.

[00:01:43] It’s not a set it and forget it undertaking. That doesn’t mean that an estate plan has a lot of maintenance required. You want to make sure that, for example, if you have a revocable trust, that those assets are in the trust. And if you get new assets that they’re put into the trust, for [00:02:00] example, but there’s not a lot of maintenance involved, right?

[00:02:03] You don’t have to go see the lawyer every year to make sure that things right necessarily. Okay. But there are reasons to review and revise an estate plan in order to make sure that it still represents and accomplishes your goals financially and with your family.

[00:02:20] So today we’re going to discuss the things that debunk the myth that once you’ve made your estate plan, you can simply forget about it and stick it in the filing cabinet or safe, and never look at it again.

[00:02:32] So we’ve got about 10 items, believe it or not, that you should consider as to why you should review this estate plan. Why it’s not a set, set it and forget it undertaking.

[00:02:44] So starting with number one, what do you think the first thing is that we want to say here? Number one, life changes, right?

[00:02:53] Major life events like marriage, divorce, the birth of a child, the death of a family [00:03:00] member. These all necessitate potentially reviewing and possibly revising your estate plan. They can significantly alter your intentions. You know, regarding who’s going to be in charge, how things are going to be distributed.

[00:03:16] If you have a new child, then does that kid get anything? Was the previous estate plan drafted so that any future children are included? Not all of them are. And so births, deaths, divorces, marriages, do we want the son in law to get anything? Not always.

[00:03:34] Do we want to make sure that those in laws are out potentially? Do we want to protect the newly married daughter and her estate? What she inherits from you, right? Or son. So major life changes, number one.

[00:03:47] Number two, financial shifts. So significant changes in your financial situation, like, acquiring new assets, winning the lottery, significant appreciation in a [00:04:00] business or piece of real estate or investment assets or decreases in those values as well may require a revision and an amendment to your estate plan because there’s things that come up with financial changes.

[00:04:16] If your estate goes up, there’s more likelihood that you’re going to be potentially taxable. If you’re already taxable at an estate level, then the increase might mean that there’s maybe some other things that we should talk about, right? Or if you’ve had a major loss, maybe you don’t have to have a quite as complex of an upstate plan or if you have a business that you’re now running or that’s increasing in value, you know, those kind of things are things to consider as far as changing your state plan. So any kind of financial changes should be part of the review process in an estate plan.

[00:04:51] Number three, changes in relationships. Now, this is probably one that you thought was coming. Relationships change, right? Familial [00:05:00] relationships change. This is when we have a divorce or marriage or babies showing up, right? Or people passing away.

[00:05:06] Also, relationships change with friends, right? A lot of the time, the old neighbor that you never haven’t lived next to for 30 years is still named the executor and guardian of the kids. So, new changes in family, new changes in relationships.

[00:05:19] Your best friend is no longer your best friend, maybe he’s your worst enemy now, right? Estrangement from family members, new business partners, that kind of thing can have an impact on your estate plan and should be reviewed when those kinds of things happen, right? Those kinds of relationships with family and friends, business associates and partners evolve over time, right? So changes in relationships, number three.

[00:05:43] Number four, tax law changes. So changes in the federal and state estate and gift taxes and income taxes can potentially impact your estate plan. And so the thresholds for a state tax exemptions often go up. [00:06:00] Sometimes they go down, sometimes they go away, sometimes they come back at a much lower number. All of these things have happened in the 20 plus years that I’ve been practicing law.

[00:06:09] Gift tax rules change. Sometimes there is a gift tax, sometimes we worry about it, sometimes when it’s at the federal level, it’s the same as the estate tax exemption, sometimes it’s not. Income tax changes can also affect this, how we give our kids money.

[00:06:22] So keeping your estate plan up to date with regard to the tax changes is important. And you’re not always going to see these, right? As a non attorney person that doesn’t research estate planning or estate tax changes or gift tax changes.

[00:06:37] You may not see this, but in my case, with my clients, if there’s major tax changes, I’m going to let them know. So there’s another thing too, another thing with regard to law changes is there was a new law that recently was introduced. It’s not necessarily a law, I guess, but a new regulation. Which is another story that was recently introduced with regard to registering businesses with the federal government [00:07:00] in order to prevent business crimes, like Rico crimes and stuff like that.

[00:07:05] And so, that’s something that we’re notifying our clients of that, hey, that’s this reporting requirement now. And so sometimes that’ll make you review your estate plan as well, because a lot of estate plans have like entities or limited liability companies or partnerships that are part of their estate plan. So that’s another kind of law change that recently happened.

[00:07:24] Number five. State residency changes. So moving to a different state doesn’t always impact your estate plan, but it often can, and every time that you move and change states, you should have an attorney from that state. Review your estate plan to make sure that you’re covering all the things that you need to cover.

[00:07:43] Maybe the new state that you have has a different kind of an estate tax or no estate tax at all. So maybe that gives you more flexibility with your plan if you’re moving from Washington, which does have an estate tax, which is a very low exemption level. And maybe you move to Idaho, right, or Montana or [00:08:00] something that doesn’t have an estate tax.

[00:08:01] Maybe that gives you more flexibility as to how you want to distribute things so that you don’t have to worry as much about that estate tax issue. Also, this doesn’t always apply and it shouldn’t apply, but this is something to know, I guess.

[00:08:14] If an estate plan, like a will or a trust, is valid in one state, typically the state that you move to or another state will recognize it as long as it was validly executed in the state where it was executed, or under which law it was executed, it’ll still be good. And so the vast majority of plans will still be good, but it’s always a good idea to review to see if there’s any nuance, right, or any tax law changes that could help.

[00:08:39] Number six, health changes. Changes in your health or that of the beneficiaries should prompt you to review your estate plan and potentially adjust how the plan is set up, particularly regarding powers of attorney, health care directives, long term care provisions, issues with like beneficiaries, maybe they had an accident, [00:09:00] now they’re disabled.

[00:09:01] So maybe you don’t want to give them a bunch of money in their own name, maybe you want to revise and have a special needs trust, which we’ve talked about in the past. Maybe your spouse has got dementia now and we need to revise things so that we can take advantage of Potential Medicaid style programs that help with longterm care situations.

[00:09:19] And so that’s a reason to review your state plan of health changes, right? As you age, things change more and more people these days are getting some form of dementia, which requires longterm care. People don’t stay in the family home like they used to as much. And so they’re going to long term care facilities, which are very expensive in most cases.

[00:09:42] And so taking advantage of the laws and an effective and robust estate plan can significantly help there. And so reviewing health care changes or health changes in the individuals is significant, because there’s something often that can be done to amend things to make it so [00:10:00] that person can potentially qualify for government programs or assistance in the future.

[00:10:04] Number seven, legal changes. So over time changes in the legal environment could impact various components of your estate plan, like staying abreast of relevant legal changes and consulting with your estate planning attorney can help you ensure that the state plan that you have remains effective and valid.

[00:10:23] And that’s what I was talking about with the registration of business entities, right? We don’t want to get in trouble there by not registering because there’s significant fines involved if you don’t. And potentially going to jail, which is kind of crazy. So those kinds of things are important to stay aware of.

[00:10:39] And if you hear something, call, right? If I always tell my clients, if you have a question that comes up or if you hear something or something changes, always give me a call because usually I’ll know, you know, what’s going on and I can give you an answer, whether that applies to you or whether you should make a change.

[00:10:55] So knowing and staying, keeping that relationship with your attorney, [00:11:00] strong and that communication open really can help. And sometimes maybe it’s like, Hey, I made this, you know, I got this other house. Do I need to do anything with my estate plan? And so, you know, maybe we say, well, maybe not, maybe yes. It’s a good idea to look at it. Right?

[00:11:18] Number eight. Regular reviews. Even if there’s no significant changes, there’s no law changes, there’s no family changes, right? You’re still friends with your best friend. He’s not your worst enemy anymore. Right. It’s good practice to review your estate plan regularly.

[00:11:31] I tell clients to take a look at it every two to five years, regardless of what happens, two to five years of major life events is what I tell people, which you already talked about, but pull it out. Maybe your neighbor, Bob is no longer the guy you want to have in charge. Maybe your kids are adults and they can be in charge now, right?

[00:11:50] Or maybe your brother passed away, or maybe he moved out of so he’s not able to do it. Or your sister, right? Or whoever it was, the executors. Just not up to it anymore, [00:12:00] right? Or there’s a better choice. So looking at it regularly and seeing how you have it set up, maybe you had like issues with one of your teenage kids.

[00:12:09] And so you put some restrictions on them with regard to their inheritance, whereas now they’re fully functioning as an adult and they’re doing great. Maybe you can remove some of those restrictions so they can have a little bit more freedom as far as using those funds for what they need it for.

[00:12:24] So those are kind of things that come up when you regularly review documents that you may not even think about because you might not even remember that you put that stuff in there, right? Maybe you didn’t remember that you put a drug test provision or something in your kid’s trust, which oftentimes happens.

[00:12:40] So those are kinds of things that come up when you regularly review. And that doesn’t mean you have to go to your lawyer to review it, pull it out and read it yourself. And if you don’t know what it means, of course, call the lawyer, but just take a look at it, be aware of what it says, right? Most of the time, if your plans drafted properly, you’ll be able to see what it says pretty easily.

[00:12:59] [00:13:00] Number nine, ensuring compliance and validity. Regular reviews and updates help ensure that all elements of your estate plan comply with the current laws and regulations. This is sort of like the one we just did number seven legal changes.

[00:13:11] So this can also prevent legal challenges in the future. Maybe the law changed, right? Maybe a lot of the things that change or could impact an estate plan have to do with either taxes or like marriage, right? What marriage is, right.? And what if a unmarried couple, what does that mean? Right.

[00:13:31] What’s an unmarried couple? What can the unmarried partner do to one of your beneficiaries share? Can they access that money at all? Do they have a challenge that they can make? So you want to make sure that kind of stuff’s dialed in, that you’re still in compliance with the law. These laws change regularly, the nuance of the law changes regularly. And so you want to make sure that those are up to date.

[00:13:53] Finally, number 10, why do we do a state plan? Why do we do an estate plan? Right? Knowing that your state [00:14:00] is up to date can give you that peace of mind. Plan today, peace of mind tomorrow, that’s my motto in my logo. Having peace of mind with regard to your wishes so that they’re respected and that your loved ones are cared for is significant.

[00:14:13] We want to make sure that our plans in place, because when you set this thing up, right? We’ve talked about peace of mind, a lot of this podcast over the many episodes is episode 25, by the way. So welcome to 25.

[00:14:25] That peace of mind is really what we’re chasing, right? When we get that thing in place and we’re like, okay, the kids will be protected now, right? If we’re both gone, if we’re a married couple and you have younger kids, the kids will be taken care of. We have guardians in there. Now we have a person to manage their money. Right?

[00:14:40] And so, that peace of mind it’s fleeting. You get it when you set this plan up and it can be fleeting over the years. Right? But if you realize, or if you don’t realize that things are changing, know, that your estate plan actually doesn’t do what it is supposed to do. You need to get that back.[00:15:00]

[00:15:00] And amending and revising your estate plan can lead to additional peace of mind. So you’ll get it again. You might be worried for a few weeks before it gets done. Like, man, I just hope nothing happens to me this few weeks, you know, before the plans changed. But once it’s changed, you’re going to get that peace of mind again.

[00:15:18] You’re going to get that feeling that like relaxed shoulder, lean back in the chair. You know, feeling and treat yourself again. If you’ve updated again, go out to dinner again, you know, do something fun. And so you can still do that, there’s no limit as the celebration with regard to getting your estate plan done. So those are the 10 things to think about. Okay?

[00:15:42] Which leads us to our story time this week, which is short. I’ve, these are all general stories this week. Cause it happens so much. Like, I meet with a lot of people with old wills. I’m not sure how many times I’ve met with people whose adult children come in with their parents will. Maybe their [00:16:00] parent passed away, and their parents will still appoints a guardian for little Johnny, right?

[00:16:06] And the minor kids and maybe little Johnny’s the one that’s there and he’s 60 years old, right? There’s wills that come in all the time where there’s a brother or sister that was born after the will was drafted, that’s not named in there, right? Or the old neighbor that they haven’t been neighbors with in 30 years is still the executor.

[00:16:26] Good old Bob next door. I trust him with my life. He might be dead, right? Maybe the brother that you put in charge of the sister, you put in charge of the aunt or whatever, right?

[00:16:36] They might be dead or they might have dementia, they might not be able to do it. And so those kinds of things cause problems if we’re doing a probate. I just had one actually the other day where there’s an adult child. This will was super old, the adult child’s in her fifties now, I think her dad made this will, he put his brother in charge.

[00:16:57] His brother’s kind of a control freak and [00:17:00] not cooperative. And so it kind of caused problems and getting this probate open for this man who had died and his daughter, so only daughter, only child should be the executor. She sort of had to make a rigmarole sort of process to get herself appointed instead of this uncle who’s not really up to the challenge.

[00:17:20] So we want to make sure that our state plan is up to date for those kind of reasons. New kids, new friends, different relationships.

[00:17:27] The other thing that comes up is outdated tax language. Like they may have done an estate plan a long time ago. Washington has an estate tax, but it hasn’t always had an estate tax.

[00:17:37] Right. And it hasn’t always had the same estate taxes changed over the years. And so having those kinds of things up to date really makes a difference. Not having it up to date or having outdated language can make you lose out on certain exemptions and certain ways to shelter your money. And so that comes in all the time, right?

[00:17:56] That’s why we’re talking about this today, but take a look at it [00:18:00] every two to five years. Take a look at your estate plan, major life events, and you should be good, right? If there’s any major law changes, your lawyer should tell you, or if you come to me, I will tell you when you’re my client. So, that’s that for that topic.

[00:18:15] And so I was reading an article this week. I think I’m introducing a new segment. This may not be every week, but I was reading through the headlines on Google or something this week. And I saw an article come out. I think I’m going to introduce this new segment as in the news or this week in estate planning or something like that. I’m not sure what it’s going to be called. Let’s call it this week in estate planning. Okay?

[00:18:34] So I wanted to share this article because it sort of talks about things that we’ve talked about before, right? It talks about the purpose of this podcast, essentially, which is to raise awareness of estate planning, educate, sort of open the door to, Hey, it’s not the worst thing in the world, it’s not super complicated, it’s not hard. You know, you want to be able to do your estate planning, feel that peace of mind, accomplish your goals for your family, protect your [00:19:00] children, protect your friends, your spouse. And so this thing comes up, I see these things. Okay? And so I was prompted to share this article.

[00:19:07] It’s from a report that was created by Ameriprise Financials, Couples, Money and Retirement Report. And it was just released this past week. And it says, American investors in committed relationships overwhelmingly say that their partners share the same retirement goals. Okay? But most of not put in a state plan together. Ameriprise financials couples money and retirement report released last Wednesday found that 95% of couples agree that honest and transparent being honest and transparent with one another when it comes to their finances.

[00:19:41] And 91% say they share the same financial goals. So that’s good, right? They’re on the same page financially, married couples or couples that have been together for a long time. The survey, which was polled, more than 1500 couples. And this is a demographic that we’re sort of talking to. I think 1500 American couples with a hundred thousand or [00:20:00] more and investable assets focus primarily on those between 47 and 70 who have retired in the last decade or plan to do so in the next 10 years.

[00:20:08] So that’s kind of my, the estate planners wheelhouse, like, 45 to 70 thinking about retirement or just retired, right? And they have money to invest, they have a state to protect. And this continuing on this article says, well, it found that 93% of couples share similar goals for retirement and agree on when to retire.

[00:20:29] 24% of respondents said they have not come to agreement on how much money they need to save or how much they will spend on themselves or children or grandchildren, both today or as part of their estate. So this is a barrier to entry on for some people on a state planning.

[00:20:44] I don’t know how much I’m supposed to give my kids. I don’t know how much or if I’m supposed to give the grandkids anything.

[00:20:49] And this is the thing that caught me the most. And I think I knew this. It says more than 52% these couples. So these are couples 45 to 70 [00:21:00] recently retired or thinking about retiring in the next 10 years. They have over a hundred thousand in investable assets. So that means they probably have a house to you know, they have their investment funds through their IRAs or 401ks probably.

[00:21:13] These are people that are actively investing money, right? And saving for retirement more than half. 52% of the couples surveyed said they have not yet set up an estate plan. So 52% of this demographic, which is like prime estate planning, pre retirement, recent retirees with money in the stock market, money invested, money saved for retirement.

[00:21:36] 52 percent of these people do not have estate plans, which is Yeah. Pretty shocking to me because there’s so much, you know, to lose by not having one. And if you’re a regular listener of legacy talk, which I hope you are, or become, please like, and subscribe, you know, that my goal is to make sure that people have their estate plans done.

[00:21:55] We want to make sure that estate plan is robust and that it’s up to date. [00:22:00] And then if things change, we change it, right? We amend it. It’s a good estate plan is easily amendable. It’s in concrete when you pass, but during your lifetime, you can move it around, right? You can change things around. And so if 52 percent of this demographic that they’re talking about hadn’t done their state plan yet, that’s significant.

[00:22:19] So if that’s you, if you’re listening to this podcast today for the first time, or recently, or haven’t done this day plan time to start thinking about it. Right?

[00:22:27] It might not be the most interesting thing to talk about or think about or listen to. I hopefully this podcast listening experience is not super boring. You know, I don’t know. Maybe it is anyway, but the topic’s important, right?

[00:22:39] We want to make sure that you’ve got an estate plan that works and if you don’t time to think about it, right? No more delay.

[00:22:46] And so if you’re afraid about it, a few weeks ago we did an episode about overcoming the fear of death. Listen to that one for some resources and some tips.

[00:22:54] So anyway, that’s it for today’s episode. I’d like to thank you for listening to today’s episode of legacy [00:23:00] talk. If you liked today’s episode and would like to learn more, please like, and subscribe for more great content. I’ve been your host, James Jones to your legacy.