It is not uncommon for people to procrastinate on estate planning. Even people who already have an estate plan may not have reviewed it in some time. Changes in the family, such as births and deaths, or in tax laws should trigger a review. Otherwise, people should review the plan every five years to ensure that it still reflects their financial situation and their wishes.
Some people may want to consider a trust. These powerful tools can allow a person to control how assets are distributed to beneficiaries. Assets in a trust do not have to pass through the time-consuming and expensive probate process. Trusts can protect assets from a former spouse or from creditors, and they can help family members with special needs without affecting their access to benefits. A trust can also protect assets for minor children, increase the exemption available to spouses and ensure that assets are distributed fairly in blended families.
Another potentially difficult element of estate planning is discussing it with family members. Some experts suggest making this an ongoing conversation over time. Not everyone may want to provide specific information, but it can be helpful to share reasons behind certain estate planning decisions. Communication can be particularly important if parents are leaving assets unequally to children. They might also want to explore other ways to distribute assets, such as paying a child who is a caregiver.
Some people prefer to give away part of the estate while still alive. This can also provide information about how well a family member handles money. There may be tax benefits to gifting.
In addition to a trust, a person may have an IRA and other accounts to avoid probate. However, non-spousal heirs must roll an IRA into an inherited IRA to avoid required minimum distributions.
People may also want to consider planning in case of becoming incapacitated. An attorney may be able to assist a person with any complexities in creating an estate plan.