It’s a good first step for someone in California wishing to protect assets or provide for future generations to have an estate plan in place. However, if an existing plan is not updated or being regularly reviewed, there may be gaps or instances where current wishes are not reflected. For this reason, individuals with an estate plan are often advised to be proactive about making appropriate adjustments.
One sign that estate plans may need attention is the absence of important plan components, such as an advanced medical directive or financial power of attorney. Beneficiaries need to be periodically updated as well to account for changes with family situations, such as new births or deaths. Also, if an executor is deceased or unable to carry out duties and no successor is named, the court will appoint another person, usually one of the other beneficiaries.
Lack of sufficient funding and lapsed coverage are some of the common issues with neglected insurance policies. Another common estate oversight is naming a close family member or friend as a trustee. If such individuals are unaware of their responsibilities, it may be better for a third-party representative, such as a financial institution or trust company, to act as a trustee. Older estate plans may also need updated if tax code revisions aren’t addressed, including exemption changes related to the Tax Cuts and Jobs Act.
With retirement savings, an estate planning lawyer may recommend using direct beneficiary designations to sidestep the probate process. An attorney might also suggest leaving IRAs and other tax-advantaged accounts to grandchildren to defer or possibly avoid tax burdens. Lastly, a lawyer may be able to help a client moving to California determine if their estate documents are compliant with estate-related regulations. For clients with properties in multiple states, an attorney might recommend transferring ownership rights to a revocable living trust.