And the surprising reality is that many of us are worth more dead than alive. That’s especially true for government workers who, in addition to (so far) steady and safe jobs, have sizable 401(k) plans or money (in the form of life insurance) they can’t touch. But which will come in handy for their heirs. Many people also have homes that are paid for and worth a lot more, in most areas, than when they bought them. Now what?
Lack of control is one of the frustrating things about this already terrifying pandemic. We can spray, mask up, practice social distancing. Avoid crowds, family, everybody. But then what?
The good news, if it can be called that, is there are very, very important and valuable things under your control. Things only you can deal with, that will make life better for you and yours. One of the redeeming features of the COVID-19 threat is that it has forced many people to think the unthinkable.
No matter how the pandemic has impacted your life, by a little or a lot, changes in your own situation may have happened that mean you should adjust your estate accordingly. Although most feds probably consider themselves middle class, many, thanks to their retirement package, Thrift Savings Plan, life insurance and survivor benefits, actually have substantial estates. Being worth more dead than alive is a reality for many.
Changes may have occurred requiring you to put the so-called “new normal” on hold and deal with your personal financial life. For example, did your daughter or son marry that loser who, at 46, is still trying to form a rock band? Did you celebrate the birth of a grandchild, or buy or sell a house? Or did you retire and move 2,000 miles away?
A lot of things could have happened this year that are off your radar because you are still adjusting to the many changes the pandemic has brought to our everyday lives. So we’ve called on Washington, D.C.-area attorney Tom O’Rourke for a tuneup. Tom is an estate tax attorney, a former fed with the IRS and most of his clients are current or former civil servants. Tom will be my guest today on our Your Turn radio show at 10 a.m. EST. You can listen live here or on 1500 AM in the D.C. area. It will also be archived on our webpage along with previous shows, so you or a friend can listen later.
For a sneak preview of what we’ll be talking about today, Tom has given us this checklist. He said, “Many people view their estate plan as one of life’s necessary chores. Frequently, once the plan is signed they simply file it away (hopefully they don’t lose it) and forget about it. But any estate plan should be reviewed periodically to make sure it continues to meet your needs.”
Some of the life events that make it essential that people review and in many cases revised their plans include:
Birth of a child: When this happens, at a minimum, a guardian needs to be appointed for the child. It is also advisable to place any assets the child may inherit into a trust.
You are either thinking about a divorce or you have perhaps already divorced: You need to review and change beneficiary designations, property ownership arrangements and wills, trusts, and powers of attorney.
Your child gets married: This may or may not prompt you to revise your will or trust.
One of your beneficiaries develops substance abuse problems or has issues with managing finances.
The persons you have named as personal representative, trustee, or agents under a power of attorney have died, moved away, or are no longer capable of fulfilling these obligations.
When a beneficiary such as a child faces financial challenges.
Your minor children become responsible adults and some of the provisions in your will or trust that were designed to protect them are no longer needed.
There has been a change in the law that affects your estate plan.
You receive a substantial inheritance or other windfall.
You have an estate plan but can’t find it!
You acquire property or move to another jurisdiction.
If any of these events happen, Tom says you need to at least have a discussion with your estate planning attorney to determine whether it is necessary to revise your estate plan to address these issues.
In April 1919, when he joined other world leaders in Paris to settle peace terms for World War I, then-President Woodrow Wilson caught the Spanish Flu, at a time when he hadn’t even addressed the pandemic that had started the prior year. He was bedridden at the Hôtel du Prince Murat with coughing fits, high fever, and “delirious rantings” about how the hotel was swarming with French spies. Though Wilson favored treating Germany with leniency to foster world peace and diplomacy, the flu potentially had a role in him acquiescing to British and French demands for steep debt and loss of land for Germany.