When you put your initial estate plan in place, it should be viewed as a starting point. You are covering your bases in the present, but things will invariably change as the years pass.
Family Evolution
An estate plan for a relatively young, single adult is usually going to be simple and straightforward since there is no one relying on you when you are in this situation.
If and when you get married, things are going to change, and a major estate plan revision will be in order. You should discuss the matter with your spouse so you can make mutual decisions that you both feel comfortable with going forward.
It is possible to establish a joint living trust, and this can be a good choice if you and your spouse are going to own most of your valuable property together. If you decide to create separate estate plans, this is certainly possible, and we can explain your options if you consult with us.
When children come along, there is another dimension to consider. You have to name a guardian for the children in a will, and you should make sure that you have an appropriate level of life insurance.
To account for the management of assets on behalf of a minor child, a trustee would be in place if you use a living trust. A testamentary trust is a trust that is embedded within a will. It would be created after your passing, and this is another option that can be used to protect a minor.
The plan should include an incapacity component. A living will should be used to state your life support preferences, and you can add a durable power of attorney for health care to name someone to make medical decisions on your behalf.
If you have a living trust, you can designate a disability trustee to act as the administrator in the event of your incapacity. A durable power of attorney for property can be added to name someone to manage property that is not held by a trust.
When there are further additions to the family, your estate plan will need revisions, and this can also apply to the loss of people that are part of the plan.
Changes in Marital Status
A change in marital status is another major life event that will trigger the need for an estate plan update. If you are getting remarried as a parent, and your spouse-to-be is younger than you are, you may have concerns about the inheritances that you want to leave to your children.
There is a solution in the form of the qualified terminable interest property (QTIP) trust. To implement this strategy, you convey assets into the trust, and you name a trustee to serve as the administrator.
Your spouse would be the initial beneficiary of the trust, and your children would be the successor beneficiaries. If you predecease your spouse, they could utilize property that is owned by the trust, and they would receive distributions of the trust’s earnings.
After the death of your surviving spouse, your children would become the beneficiaries, so you would be satisfying all of your responsibilities in an appropriate manner.
Legacy Protection
As you get older, your financial situation may improve, and you may start to recognize the fact that you may need living assistance eventually. From a financial perspective, estate taxes can have a significant impact if you have been very successful.
The federal estate tax carries a 40 percent top rate, and it can be levied on the portion of an estate that exceeds $11.7 million. This is the exclusion in 2021, but it is scheduled to go down to $5.49 million at the beginning of 2026.
We have a state-level estate tax here in Connecticut with an exclusion of $7.1 million this year. There are steps that you can take to ease the burden if taxation is going to be a factor.
With regard to long-term care, Medicare does not pay for a stay in a nursing home, and it does not cover in-home care. Medicaid will cover these costs if you can gain eligibility, and you could establish an income only Medicaid trust to develop the right financial profile.
We Are Here to Help!
In addition to the specific circumstances that will call for estate plan updates, you should consult with an attorney on a periodic basis to review your plan in a general sense.
If you are ready to do just that, we are here to help, and we can work with you to put an initial plan in place if you are currently unprepared.
You can schedule a consultation at our estate planning office in Glastonbury or Westport, CT if you call us at 860-548-1000. There is also a contact form on this site you can use to send us a message, and if you reach out electronically, we will get back in touch with you promptly.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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