The Importance of Proactive Estate Planning
Authored by: Robert “Bobby” T. Carroll
A common mistake that people make is not having an estate plan. According to Caring.com’s 2024 Wills Survey, only 32% of American adults have a Will. However, even if someone has a Will, it can often be tucked away for decades, not being reviewed as life circumstances change. Both of these situations can result in dire consequences when a person is most vulnerable. This could be avoided by proactive estate planning.
Estate planning is not a set it and forget it process. Life is dynamic and proactive estate plans should evolve over time as well. Below is an example of someone who has an estate plan in place from 1996, but has not reviewed it since it was signed.
Assume the following situation: Jane, a Vice President with a large corporation at the time, created an estate plan to provide for her husband and children in case she passed away. She had three children, aged 11, 6, and 4 at the time. Her primary concern was making sure that her husband had enough to take care of the children and to pay for their education. She also made sure to include $500 to her church and $500 to a local charity. Her executor (in Florida, we call this a Personal Representative) will be her husband, but if he cannot act, then it will be a local bank. Fast forward 30 years.
Jane and her husband are now retired, and her husband was recently diagnosed with the early stages of Alzheimer’s. Her children are 41, 36, and 34, have each been out of school for at least 10 years, and are established in their careers. She now has five grandchildren. Her youngest grandchild has spina bifida and requires a motorized wheelchair. In her retirement, she moved and no longer attends the same church and the local charity she chose has ceased operations.
Not even getting into the substantial changes in federal estate tax law (and Jane’s finances) that have probably occurred in the last 30 years, her estate plan has become outdated in a number of ways. Starting with the cash distributions to the church and local charity, Jane may want to revisit not only the recipients of these gifts, but also the amounts as inflation has changed the impact $500 has since 1996. She also may want to include her new church, and will want to remove the local charity that is no longer operating.
Next, her goals have changed, and the provisions in her estate plan that are used to accomplish them will need to be reviewed to make sure they still achieve these goals. Provisions that were intended to pay for college for her children can be removed with a new emphasis on allowing the children to enjoy their inheritance in other ways, or to provide for the education of the grandchildren. Provisions can be added to make sure that her grandchild with spina bifida has resources to provide for her care. Also, her husband’s Alzheimer’s diagnosis may mean that Jane is worried about leaving assets directly to him, and she may want to consider leaving the assets to him in a trust to make sure that he is protected and provided for if his Alzheimer’s progresses.
Ultimately, whatever your estate plan says at your death (or, if you do not have a plan in place, what state law provides) will control how your life’s savings will be distributed and will control how you will be provided for when you are at your most vulnerable.That is why it is crucial to have an estate plan in place and review that estate plan every few years or after any major life events, such as moving to a new state, or a birth, death, marriage, or divorce to make sure it still fits your wishes. While no one can control for every eventuality, by having a regularly reviewed estate plan, you can put yourself and your loved ones in the best position to be properly provided for and to ease some of their stress following your death.
Author Bio:
Robert “Bobby” T. Carroll is a Partner with Galbraith Weatherbie Law in the firm’s Naples office. Born and raised in Fort Wayne, Indiana, he earned his J.D. from Ave Maria School of Law and his LL.M. in taxation from NYU School of Law. He is licensed to practice in Florida and Indiana, and is Board Certified by the Florida Bar in the area of Wills, Trusts & Estates.
Galbraith Weatherbie Law (GW Law) is a leading estate planning law firm with offices in Naples, Florida, and Indianapolis, Indiana. They help clients define their legacy through elevated estate planning solutions. Their attorneys have developed customized planning solutions for over $75 billion of client assets. Learn more at www.GWTrust.Law.