It is important to revisit your estate plan periodically. Estate planning is not a one-time event. You want to be sure that the plans and documents needed to carry our your plan reflect your current desires, changes in your situation and the applicable laws.
Current Desires
Your desires may have changed and you may no longer want to name particular persons as fiduciaries or beneficiaries. Even if all remains well with you and your loved ones, you may want to update a plan so that it provides your beneficiaries with protection against potential creditors or divorces, in case they fall on hard times. Having children receive their inheritances through properly-structured, lifelong trusts, rather than in short-term trusts or outright, can help provide them with this protection. These trusts can be designed to give the children a lot of control or only a little control, as you prefer. You can also protect your surviving spouse against predators by having assets pass to him in trust, if desired. This can also help protect your children against your spouse remarrying and then either accidentally or deliberately leaving your assets to his new spouse, because the assets remaining in a trust at the death of one beneficiary can be distributed as you decide, not as the beneficiary decides.
Life Changes
People marry, have children, develop new habits, get sick, become disabled, get divorced, start successful businesses, experience business failures or job loss, and eventually we all die. Over time, a plan which made sense for you and your loved ones when it was created may no longer make sense. A periodic review and update process can help you ensure that your plan appropriately reflects changes in your life and the lives of your intended beneficiaries. For example, a plan that provided for outright distributions to adult beneficiaries may need to be changed to provide a supplemental needs trust for a now-disabled beneficiary or long-term trust planning to protect a child with a troubled marriage.
If you did your existing estate planning documents while living in another state and later moved to Georgia, it is a very good idea to have new documents prepared, or at least modified. A move does not automatically make your old documents ineffective. However, differences between the states can be quite significant, and having your documents drafted to comply with Georgia law can help ensure that things will go as smoothly as possible if you die or become incapacitated.
Applicable State Laws
Georgia made major changes to its probate laws in 1998, and made major changes to its trust laws (many of which also affect Wills and estates) in 2010 and 2018. In 2007, it changed the way that health care related issues are addressed by replacing two previous forms with the single-form Advance Directive for Health Care. In 2017, GA revamped its Power of Attorney laws, which increased their potential benefits, but also created new requirements to create a valid Power of Attorney. Smaller changes have also been made to various Georgia laws over the years. While many changes to state law are drafted in a way that prevents older documents from being automatically affected, it can still be important to check every so often, to help ensure that your documents will work as intended.
Applicable Tax Laws
The changes to the federal wealth transfer (gift, estate, and GST) tax laws since 1997 have been coming almost non-stop and they have been significant. Of importance today to estate planning are the major tax changes made by the 2012 Tax Act and the 2017 Tax Act. The wealth transfer tax exemption amounts have skyrocketed and we now have a new concept called, “portability.” As a result of these changes, estate taxation is much less of a concern to all but the top 2% of wealth strata, and estate planning documents can be simplified for most married couples without having to worry about a potential future estate tax. However, at the same time, these pervasive tax law changes have made income taxation a bigger concern.
In addition, changes to the federal estate tax laws resulted in many states making changes to their own estate or inheritance tax laws. For Georgia residents, those changes were beneficial, as they wiped out Georgia’s estate tax and the state has not replaced it. However, a lot of other states have state-level estate or inheritance taxes that can apply even if there is no federal estate tax due. Those who have assets, especially real estate, located in other states, should review their plans to determine whether state estate or inheritance taxes may be a problem.
Need to Periodically Update Your Financial Power of Attorney (“POA”) & Advance Directive for Health Care (“Advance Directive”)
While POAs and Advanced Directives do not normally become legally ineffective by the mere passage of time, it is prudent to periodically update these documents about every 3 years or so as they tend to lose practical power over time, especially as to the POA. As these documents get older, third parties tend to get nervous that these agency documents may no longer reflect your current desires or that your selected agent may be acting inappropriately for their own benefit rather than for your best interests. As such, more and more financial institutions, insurance companies, government agencies, etc. are deciding they are better off not getting involved and simply not agreeing to abide by the agent’s requests. Under Georgia law, as well as the law of most other states, such third parties are not subject to penalty or liability for simply refusing to follow the agent’s directions under an otherwise legally valid POA or Advance Directive. We have found that our clients who keep these documents periodically updated significantly reduce the risk of non-compliance and hassle in dealing with third parties when these documents are actually needed. [2017 Georgia Law Update] Any POA created on or after July 1, 2017, must be signed in a particular way in order to be legally valid. In addition, the actual statutory form or one of two other similar variations must be used as the POA form if you want to have access to the new power in the POA agent to possibly force a third party (such as a bank) to follow their directions.
It is important to keep your estate plan current. We are here to help you plan for your protection and the protection of your loved ones. Please Contact us at 678-720-0750 or info@morgandisalvo.com.
