Does Your Estate Plan Need Its Checkup?

September 16, 2008
Marc A.Aaronson, CPA, JD,LLM

Physician's Money Digest, June15 2003, Volume 10, Issue 11

As a physician, you know mortality is a factof life. But have you dealt with it in regardto your own personal affairs? As you diligentlyschedule periodic physical checkups, periodicestate planning checkups also are important.They outline the proactive steps you cantake now to preserve your estate at thetime of your death.

Thinking about your demise isn'tmuch fun, but your family will appreciateyou doing it. When formulatingyour estate plan, be sure to discuss thefollowing 8 fundamental items withyour estate planning advisors:

1. Legal documents. Be sure youhave essential legal documents in ordershould you become incapacitated. Ifyou don't, consult with an attorney toinitiate the following paperwork:

  • A durable power of attorney, designatingthe proper agent and delegatingas many powers as possible (especially the powerto make gifts and handle federal tax matters);
  • A health care proxy, designating someoneto make your health care decisions; and
  • A living will in case your decisions regardinglife-sustaining medical treatment and/or theappointment of the person to make those decisionsare not otherwise provided for in yourhealth care proxy.

Check these documents regularly to ensurethat the designated person and the instructionsare correct. And make sure the appropriate persons(eg, family members and/or your attorney)hold these documents or are aware of their locationand have access to them for prompt retrievalshould you become incapacitated.

2.Your will. If you do not have a will, completeone as soon as possible. If you have one,review it to ensure that it is accurate,complete, and updated. It should conformwith your current estate plan. Besure to record any estate plan changesin the will. In addition, keep abreast ofthe latest estate tax changes beingphased in over the next few years, andmake sure that your will reflects them.Also, check your will to make sure theselection of the executors and/ortrustees is still appropriate.

If anything has changed or is inaccurate,draw up a new will or a codicil(ie, will amendment). Keep the originaldocument in your attorney's officeand make sure the appropriate family membersare aware of the location.

3. Benefit plans and life insurance policies.Review your retirement plans and insurancepolicies. If necessary, revise the beneficiarydesignations, including alternates, and the payoutprovisions (ie, lump sum or annuity).

4. Living trusts. If you are incapacitated, livingtrusts ensure the continued management ofyour financial affairs. When in place, they helpavoid the expense and publicity of probate, andfacilitate estate administration in cases whereproperty is owned in several states. If you alreadyhave a living trust, review the trust document.Check the titles of the trust and of all your assets.

Living trusts are an effective estate planningtechnique in appropriate situations, but theyare no substitute for a will. Trust documentscannot appoint guardians for minor children orprovide for the disposition of any nontrustassets, such as automobiles, furniture, clothing,and other personal property that you may nothave put into the trust. Similarly, you may needa power of attorney to deal with assets that arenot held by the trust.

5. Family's liquidity. Ensure that yourspouse and children have sufficient liquid fundsin their own names for living expenses shouldyou become incapacitated or die.

6. Postmortem prepayment. Consider prepayingyour funeral arrangements or leavingyour funeral and burial instructions with theappropriate individuals.

7. Organ donation. If you wish to donateorgans, confirm that the organ donation documentis properly executed. If the organ donordesignation is not on an identification card thatyou normally carry (eg, your driver's license),make sure an appropriate person holds it forprompt retrieval upon your death.

8. Easy access. Avoid any secret stashes ofyour assets. Make sure an appropriate person hasa list of the locations and contents of any safedeposit boxes, accounts, etc, you may have, as wellas the names of those with access to them.

Marc A. Aaronson is a partner in Eisner LLP's Tax Consulting Services,

located in New York City. He welcomes questions or comments

at 212-370-1044 or maaronson@eisnerllp.com.