Estate Planning

5 Reasons to Update Your Estate Plan Today

By Paul Manger

October 21, 2020

It’s National Estate Planning Awareness Week, and with what everyone has experienced in 2020, we thought it was prudent to go over some reasons to update your estate plan today.

Your estate plan should be something you amend based on how things change in your life, your family, and the world at large. There are many things out of your control, but updating your estate plan isn’t one of them. Let’s review five reasons to update your estate plan today.

5 Reasons to Update Your Estate Plan Today:

  1. Things Change
  2. Unexpected Occurrences
  3. Changes in Tax Law
  4. The SECURE Act
  5. For Your Family’s Peace of Mind


Reason #1: Things Change

Our lives don’t run according to plan; things change. We have to remain flexible and adjust our estate plan accordingly. While estate plans are written to provide for future grandchildren, it’s also often written to cover both the marriage and divorce of children. However, there are reasons to update your plan if things change.

Two significant reasons to update your estate plan are divorcing your spouse or moving to a new state. Obviously, divorce may change many things, from living situations, beneficiaries, and more. However, a state change can come with law changes due to many laws revolving around estate planning documents that are based on state law. So, if you move out of state, make sure to update your estate plan.

What if you have a new child? Do you have a guardian named if you die? Best update your estate plan if you have children!

Another good reason to update your estate plan if things change is if you have an individual listed as the trustee that is no longer capable of serving as the trustee. If your trustee is incapacitated, it can throw a wrench in your estate plan. The same goes if one of your beneficiaries passes away, it could may be a good reason to update your estate plan.

Life comes at you fast. Make sure you remain flexible and address changes in your estate plan as they come.


Reasons to Update Your Estate Plan Today - Globe with Mask Unexpected Occurences

Reason #2: Unexpected Occurrences

With recent events, the conversation of updating your estate plan is even more top-of-mind for many. As teachers, doctors, and others go to their workplaces, they may be in a potentially higher risk work environment than before COVID-19. Many were encouraged to review their estate plans to make sure their house was in order in the event of incapacitation or death as a result of returning to a potentially higher risk work environment.


Reasons to Update Your Estate Plan Today - Calculator Tax Letters Changes in Tax Laws

Reason #3: Changes in Tax Laws

The Tax Cuts and Jobs Act of 2017 made a plethora of changes to tax law. It made it more advantageous to give to charity through QCDs and more. Changes to estate tax laws are good reasons to update your estate plan. From a tax perspective, most people will be better off giving to charity while they’re alive than waiting until after death. However, exploring your options is critical. Tax planning and estate planning need to coordinate, so you don’t miss anything.

For example, in December 2019, Congress passed The SECURE Act, which made considerable changes to how retirement plans pass to the next generation. We will get to it in more detail below, but there are implications from a tax, estate, and insurance standpoint. Ensuring your tax plan and estate plan are synchronized is a vital component of planning for your retirement.


Reasons to Update Your Estate Plan Today - IRA Sign SECURE Act

Reason #4: The SECURE Act

The SECURE Act was signed into law on December 20, 2019. This legislation significantly impacts retirees and their beneficiaries with the partial elimination of the Stretch IRA. For those of you who don’t know, the Stretch IRA was a strategy allowing beneficiaries to stretch the required minimum distributions (RMDs) from an inherited IRA throughout their lifetime.

The benefit of a Stretch IRA is two-fold. One advantage is by spreading the distribution out over their lifetime, the beneficiary’s taxable income increases only by a small amount each year. The second benefit is by only having to take relatively small withdrawals; the beneficiary can keep the inherited IRA growing in a tax-deferred or tax-free account over their lifetime. However, under the new 10-Year Rule in the SECURE Act, inherited IRAs now have to be paid out in the ten years after the original IRA owner passes.

Also, the Stretch IRA is only available to select eligible beneficiaries. With the elimination of the inherited IRA’s stretchability under the SECURE Act, most beneficiaries must now withdraw the entire balance of the inherited IRA within ten years of inheritance. This will result in an acceleration of income taxes for many beneficiaries, and the additional income may be taxed at even higher rates.

The SECURE Act gave most a reason to take another look at their estate plans. You may want to explore leaving more of your IRAs to charity while you’re still alive or get a life insurance policy to offset the taxes your beneficiaries might experience as a result of the 10-Year Rule.

Check out our on-demand webinar, The SECURE Act & Your Retirement: An Expert Roundtable, for more information on the impact of The SECURE Act, is on your plan.


And Reason to Update Your Estate Plan #5: For Your Family’s Peace of Mind

The number one reason to update your estate plan is for your family’s peace of mind. At the end of the day, your estate plan is more for you loved ones than for yourself. At Modern Wealth Management, we regularly tell our clients to experience their wealth now, with their families, instead of leaving it all to them when they’re gone.

It’s essential to know that what is left when you’re gone, though, goes where you want it to go. Having an up-to-date estate plan means your estate is transferred to the appropriate parties and provides a level of peace-of-mind to your heirs.

This isn’t just financial peace-of-mind. Having your estate plan in order allows your family to grieve without getting inundated with legal minutiae. It gives your heirs the gift of being able to focus on what matters most when you’re gone, each other. If your plan goes to probate court, it’s not a desirable situation. Probate can be a long and expensive experience, not to mention public.

Give your heirs the gift of an updated and thorough estate plan so you and them can have a peaceful transition when the time comes.

In our podcast, The Guided Retirement Show, Dean Barber spends two episodes discussing estate planning ins and outs with estate planning attorneys, Garrett Griffin and Jason Salinardi. You can find links to those episodes below.

Estate Planning: Wills & Probate  Estate Planning: Pitfalls of Going Online


The Reasons to Update Your Estate Plan Are About More than Just Money

This was just five reasons to update your estate plan, there could be many more. We encourage our clients to review their estate plans at least every three years so that nothing falls through the cracks. Taking care of this can mean hours of heartache and trouble prevented for your loved ones in the future. Is it worth your time today to provide that to your loved ones down the road? We think so.

If you have questions about estate planning, check out our on-demand webinar with estate planning attorney Garrett Griffin. You can also set up a complimentary consultation by filling out the form below.

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The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.