Many people wonder if they should update their estate plan or if their existing estate plan is adequate to meet their needs. I recommend that people review or have their estate plan reviewed annually, to make sure that it is adequate to meet their needs and to account for changes in their personal situation and changes in the laws.
Most estate planning documents that were put in place before the Michigan Estates and Protective Individuals Code in 2000 need to be updated. If your Durable Power of Attorney for Health Care was drafted before 2008, it should be reviewed. There have been changes over the last several years as to who may have access to protected health information, who has authority to make mental health treatment decisions and who has authority over anatomical gifts or organ donations.
The following is a little test that I call my estate planning risk barometer. The risk barometer assists people to make a determination if their estate plan should be updated. If you answer no to any of the questions, put that value in that slot. You then add up the total and look at the chart at the bottom, to see where you stand with regard to the updating of your plan.
For each “No” answer, insert the number in the space provided. For each “Yes” answer, enter 0. Total the numbers below.
1. Do I have a will? 10 _____
2. Is my will up to date? 5 _____
3. Do I have a trust? 5 _____
4. Is my trust up to date? 5 _____
5. Is my trust fully funded? 10 _____
6. Do I have a Health Care Power of Attorney? 10 _____
7. Do I have medical directives in my health care power of attorney or do I have a 10 _____
living will?
8. Do I have a financial power of attorney? 10 _____
9. If I have any minor children, have I designated someone to act as guardian? 5 _____
10. If I have minor children, have I made provisions for their care in the event of my 5 _____
disability or death?
11. If I have a handicapped or special needs child, have I made provisions for the 5 _____
appointment of a guardian in the event of my death or disability?
12. If I have a handicapped or special needs child, have I set up a special needs trust 5 _____
in the event of my death that would not disqualify the child from governmental
assistance?
13. If I have an elderly parent whom I am caring for, have I made provisions for their 5 _____
care upon my death or disability?
14. If I am nearing retirement, upon retirement I will no longer have tax withholdings; I 5 _____
may have to make quarterly payments for federal, state and city income taxes. Have
I made provisions for these tax payments?
15. If I have a pet, have I made provisions for its care upon my death or disability? 5 _____
16. If I or my spouse have children from a previous marriage, do I own all of my 5 _____
property in my own name and not joint with my spouse?
Total Score _____
ESTATE PLANNING RISK BAROMETER KEY
0-15 Level of risk is low.
You have done a very good job of protecting your estate.
16-30 Level of risk is moderate.
You have done a pretty good job of protecting your estate.
There may be some potential problems in your planning.
31-45 Level of risk in the “dangerous” area.
Examine areas where you are weak.
Seek advice from competent professionals that you trust.
46+ Level of risk is “severe”.
Immediately begin a comprehensive examination of your estate planning needs.
Develop a step-by-step plan to plan for your disability and to protect your estate.
Seek advice from competent professionals that you trust.
By: Matthew M. Wallace, CPA JD
Published edited March 1, 2009 in The Times Herald newspaper, Port Huron, Michigan as: Don’t wait on estate plan