As kids, we used to look at our parents’ high school pictures and poke fun at the funny hair and heavy polyester bell bottoms, in the lovely harvest-gold color. “How outdated!” we giggled smugly (looking cool in our 1990’s fabric hair scrunchies and tapered legged, stone washed jeans).
Just as clothing and hair styles trend out, is it time your legal documents looked in the mirror? Is it time for a modern-day makeover?
When is it time to alter an estate plan that has already been created?
Attorney, Pamela Epp Olsen, offers a list that indicates when it may be a good idea to revisit your estate plan, and perhaps follow-up with your attorney.
•Any concerns that the plan might no longer meet the needs of the person(s) who created the estate plan. For example, was the ranch originally going to be sold and broken equally among the children, only to find out one of the children came back to take over the ranch.
•A change relating to any person who has been given a job to do in the estate, such as personal representative or trustee. Possible changes could include a change in relationship with the author of the estate plan; change in the fiduciary’s physical, mental, or personal status that might impact the performance of their duties; or death of the fiduciary. These are the people who will see your wishes fulfilled after you pass, so you may need to change (or have a ranked list) of these fiduciaries. For example, my parents decided it was time to rewrite their will, when the person they named as guardian for their four children was in the nursing home, and their two oldest children were adults who could have cared for the two younger ones.
•A change in relation to any person who is named as a beneficiary. In transition planning, this can include an inability to be part of a previously designed succession plan- or a desire and ability to be included that did not exist when the plan was originally created. For example, a chosen successor could become disabled or pass away unexpectedly. On the flip side, there could also be a successor (a child whom the parents never thought would come back) that decides to take over the family business.
•A marked increase in the assets of the individual(s) who created the estate plan. As land values go up, and estate tax exemption set to expire in 2026, you will want to check to ensure your heirs don’t inherit major tax problems. In 2019, the federal estate tax exemption is about $11.4 million, so many farms and ranches can plan to avoid major tax consequences. However, if land prices keep rising and your asset values nears $11 million, you may want to check in with your attorney. Further, the current estate tax numbers are scheduled to sunset in 2026. This means that the applicable exemption amount could decrease to $5 million per decedent, depending on whether and how Congress acts to address the current sunset provisions.
•A change in the physical or mental health of the person(s) who created the estate plan. Dementia and Alzheimer’s occurrence increases with age, and diminished mental health can quickly destroy or alter a previous estate plan. Physical health can also deteriorate. My 99 year-old grandfather jokingly said whoever named old age the “Golden Years” obviously hadn’t lived them.
•Last, but not least, if an individual is reading any news stories regarding estate tax related issues, this might also generate a call to the estate planner to evaluate whether anticipated or passed tax law changes would impact the plan created.
Take a look in the mirror after reading through this list. Does your legal documents need updating? Is it time to make a change to ensure your ranch is transitioned to the next generation?
by Bethany Johnston, Ranch Transition Task Manager (written for the November issue of Nebraska Cattlemen's magazine)