Dental and Medical Counsel Blog

Having a comprehensive estate plan is one of the most valuable gifts you can give to both yourself and to your loved ones. Not only can your estate plan ensure that your assets are distributed according to your wishes after you are gone, but it can also help grow those assets while you are alive. Moreover, your estate plan can also protect you in the event of incapacity. What many people fail to realize, however, is that reviewing and revising your existing estate plan is every bit as important as creating the initial plan.

Common Estate Plan Components

Your estate plan should be uniquely tailored to your individual needs and goals. Nevertheless, there are some common estate planning tools and documents found in the average estate plan, such as:

• Last Will and Testament
• Trust agreement
• Power of Attorney
• Living Will
• Medical Power of Attorney
• Life Insurance Policy
• Letter of Instructions
• Business succession plan

When Should I Update My Estate Plan?

Once you have an estate plan in place, you should make a point of conducting routine reviews every few years to make sure your plan stays up to date. In addition, there are several life events that may prompt the need to make amendments to your plan, including:

• Divorce
• Marriage
• Birth of a child
• Children reaching adulthood
• Retirement
• Death of a beneficiary or fiduciary
• Changing your state of residency
• Significant changes to state or federal tax laws
• A change in what you want to happen to your professional practice upon your retirement, incapacity, or death.

How to Make Changes to Your Estate Plan

Most estate planning laws are governed by state law, meaning you need to be familiar with the formation and execution requirements in the state where you live at the time of execution. In California, making changes to some common estate planning documents can be accomplished as follows:

• Changing your Will. Relatively minor changes to your Will can be accomplished by creating a codicil or written amendment that sets forth the desired change(s). The codicil or amendment must be executed by you following the same requirements for executing an original Will and then attached to the Will.  If you wish to revoke an existing Will, you can do so by physically destroying the Will or by stating your desire to revoke it in writing in a new Will. Because people typically sign several original Wills, it is best to revoke the Will within a new Will instead of counting on being able to find and physically destroy all existing Wills.
• Changing a trust agreement. Your ability to amend or modify a trust depends on what type of trust you created. If the trust is an irrevocable living trust it cannot be modified by you. If you created a revocable living trust or a testamentary trust you can make changes by creating a trust amendment or a restatement of the trust. For minor changes, a trust amendment can be accomplished by reducing the changes to writing, titling the document as a trust amendment, notarizing your signature, and attaching it to the original trust. For more extensive changes, a trust restatement is the better option. You effectively rewrite the original trust with the changes included. The benefit to a restatement (in lieu of creating an entirely new trust) is that assets held by the trust remain in the trust. Revoking the original trust and creating a new one can trigger tax consequences because the assets are legally transferred out of the trust and into the new one.
• Changing a Power of Attorney.  This is best accomplished by revoking the existing Power of Attorney (POA) in writing (often as part of your new POA) and executing a new one.  Keep in mind that if you created a durable POA, the Agent’s authority will survive your incapacity. As such, it is important to review and revise or revoke an existing POA every few years to make sure no one has authority over you or your assets unless you want them to have that authority. You may also need to revoke an existing POA following a divorce.
• Changing a Living Will.  More commonly known as an “advanced care directive” in California, your Living Will allows you to make important healthcare decisions now in case you are unable to make them later. Although not legally required, you should have registered your original Living Will which the State of California. If you amend or revoke your Living Will you will need to register the new version with the state to ensure that your wishes are honored.
• Changing a Medical Power of Attorney. Often executed along with a Living Will, a medical or healthcare POA allows you to designate someone to make healthcare decisions for you if you are incapacitated and unable to make them yourself at some later date. Making changes to this document follows the same procedures as changing your Living Will.
• Changing a life insurance policy.  You may wish to change your beneficiary for any reason; however, people frequently forget to change their beneficiary designation on a life insurance policy after a divorce. If you want to make this change, talk to the insurer, or plan administrator if the policy is part of an employee benefits package. You will fill out a change form and submit the form. Be sure to keep a copy with your estate planning documents.
• Changing a Letter of Instructions.  A Letter of Instructions lets you provide details or instructions relating to your estate plan, but that cannot be included elsewhere in your plan. Nothing in a Letter of Instructions is legally binding; however, it can be an invaluable document if you need to explain decisions you made or offer instructions to help your Executor or beneficiaries. You can simply create a new one that is signed and dated if you need to make changes to your Letter of Instructions.
• Business succession plan. If you are a doctor, dentist, veterinarian, optometrist, or another medical professional you may be an owner or partner in a professional practice. If so, you should have a business succession plan component within your estate plan. That component may include things such as a partnership agreement, a buy-sell agreement, or even a Family Limited Partnership that set forth what will happen to your interest in the business if something happens to you. Changes to your business succession plan should only be accomplished with the assistance of professionals as they can affect the ownership of the business now and in the future as well as have a direct impact on the probate of your estate.

At Dental & Medical Counsel, we understand how important it is for you to preserve your legacy while putting directives in place, should something happen to you. If you need help creating or amending your estate plan, contact us to schedule a complimentary consultation with attorney Ali Oromchian.