Time to Update Your Estate Plan?

            What did you do on New Year's Day?  Sleep late?  Watch football games on television?  Review your estate plan?

         Oddly enough, there are people who see the start of a new year as a time not just for rest and resolutions but also for reviewing and updating plans for the coming months and years – including their wills and other documents.  Birthdays or other holidays can serve equally well as annual review dates.

         Your lawyer undoubtedly drafted your original estate plan based on existing conditions, laws, asset values, planning techniques, financial needs and objectives.  All these factors can and do change from time to time.  Your will or other documents must change with them.  You may need a codicil (amendment), or you may need to completely rewrite your will.

         To be safe, take the time at least once a year to review your will or living trust in light of your present circumstances.  Are the people I named in my will all still alive?  Have my plans been affected by marriages or divorces?  Have I moved to a different state since my will was drafted?  Is my executor still able and willing to serve?  Have new assets come into my estate?  Has my "death tax" situation changed?

         You also should ask your lawyer to look at your will at least every two years, whether or not you think you want to make changes.  State law revisions, new tax pitfalls or opportunities and new financial considerations make periodic legal reviews well worthwhile.  Watch for major estate tax changes after the November elections.

         As you review your plans, please remember that your will can contribute to a healthier society if you include a bequest to the American Red Cross.  A simple codicil (amendment) often is all that's needed.

Helping the Red Cross Outside Your Will

         We encourage all our friends to review their wills this year, or to have their wills made, and to consider adding a bequest to the American Red Cross.  But even if you do not need to make or change your will, that doesn't mean that you can't include the Red Cross in your estate plans.  Each of the following ideas allows you to provide for the Red Cross without a codicil (amendment) or a new will, and each can provide your estate with a charitable deduction. 

         Financial accounts.   People who have financial accounts at banks, savings and loan associations and credit unions generally may direct that their deposits (checking, savings, share accounts, certificates of deposit) be paid on death to a particular individual – or to a charity.  The designation can be revoked any time prior to death and in no way affects the depositor's control over the funds in the account.  Ask the manager at your financial institution how these beneficiary designations may be accomplished.  In many areas they are referred to as "P.O.D." (pay on death) accounts.

         Brokerage accounts.   If you have stocks, bonds or mutual fund shares in brokerage accounts, it is possible to name the American Red Cross as "TOD" (transfer on death) beneficiary.  You would maintain full control over the account during life.  Ask your broker about this option.

         Retirement plan benefits.  Death benefits from an Individual Retirement Account (IRA), or a qualified retirement plan such as a 401(k) or 403(b) plan, usually result in income taxes for one's heirs or estate.  Because the Red Cross is tax exempt, it may make sense to name us as death beneficiary and bequeath other assets, not burdened with income tax, to family beneficiaries.  Except for IRA gifts, a spouse's consent will be necessary if the donor is married.

         Life insurance.   You might make the Red Cross the primary or partial beneficiary of an old policy that is no longer needed for family security.  Simply ask the insurance company for the forms necessary to change the beneficiary or to transfer ownership in the policy to our name.  Or we can be named the contingent beneficiary, should your primary beneficiary die before you.

         Revocable living trust.  Many people who have living trusts don't realize that it's also possible to make gifts to the American Red Cross through their trusts, both during life and upon death.

         We hope that you will include the American Red Cross in your estate plan – and that you will inform us of your plans, so we may express our appreciation.