Estate plans should get a second look amid any significant financial changes in your life or changes in estate-tax law

By Glenn Ruffenach Feb. 13, 2020 10:45 am ET

How often do you recommend we should review or consider revising our estate plans/wills?

A good rule of thumb is to review your plans and documents every three to five years, says James Miller, president of Woodward Financial Advisors in Chapel Hill, N.C. Of course, various events and/or milestones in people’s lives also could trigger revisions.

Among them, says Mr. Miller: birth of a child or grandchild; minor children turning age 18 or going to college; children getting married; new charitable intents (or changes in such intents); death of a spouse; and signs of dementia or other cognitive issues.

Two additional reasons for revisiting your estate plans: significant financial changes in your life—say, you sell a business or inherit a substantial amount of money—or changes in estate-tax law. For instance, the new Secure Act modifies a number of rules that govern retirement accounts.

With all this in mind, “it’s important to make estate plans flexible,” Mr. Miller says. In this way, a person can “avoid frequent trips back to the estate attorney for changes, which can be costly and time consuming.”

One way to keep plans flexible is the “prudent use” of beneficiary designations, Mr. Miller says. Let’s say you wish to leave $10,000 to your nephew. You can, of course, include this bequest in your will. But if circumstances change, your lawyer would need to modify your paperwork. Or, you could name the nephew as a partial beneficiary of a retirement account. This involves little more than filling out a beneficiary designation form and adjusting the percentage the nephew would receive as the situation warrants. The cost to you: zero.

In the same vein, consider using a “transfer on death” deed or a revocable living trust, both of which can help distribute assets to heirs without the hassles of probate. Ideally, a good lawyer or financial adviser will anticipate most of these issues and can help you lay much of the groundwork—retitling accounts, changing beneficiaries, etc.

I was born in 1957 so my full-retirement age, according to the Social Security Administration, is 66 and 6 months. If I start taking payments at that age, I will get cost-of-living adjustments (almost) every year. Suppose I delay the start of my Social Security payments until I’m 70. I’ll get payments that are about 28% higher than they would have been at age 66½. But—and here’s my question—would the payouts I begin receiving at age 70 also be increased by the cumulative cost-of-living adjustments from age 66½ to age 70? Seems like they should be. If not, is the effective annual payment increase really 8% minus the annual cost-of-living adjustments?

In short: Not to worry.

You will get cost-of-living adjustments “behind the scenes,” even if you wait until age 70 to file for benefits, says Andy Landis, author of “Social Security: The Inside Story.”

To be specific, the Social Security Administration takes a person’s 35 years of best (read: largest) earnings and calculates a “primary insurance amount,” or PIA. That’s the benefit a person is eligible to receive, as you note in your question, at “full retirement age.” The agency, starting when an individual reaches age 62, will automatically apply annual cost-of-living adjustments to her/his particular PIA.

So, whenever you begin collecting benefits—whether it’s, say, age 63, or 66½, or 70—your payout will include all of the cost-of-living adjustments that other beneficiaries have been receiving.

Put another way: You won’t be missing out on any “raises” if you wait beyond age 62 (the earliest possible age for most) to claim Social Security.

I know that if I’m still working, I can delay taking required minimum distributions from my 401(k). But what counts as “still working” to be able to delay RMDs past age 72? A continuous, part-time job? A seasonal job? A short stint every year? Are there any minimum number of hours in a year one has to work?

The “still-working” rules involve employer-sponsored retirement accounts (but not individual retirement accounts). And this is one area where the Internal Revenue Service gives people a fair amount of leeway.

There is no minimum or maximum amount of work time required to qualify as “still working,” says Ed Slott, an IRA expert in Rockville Centre, N.Y. Presumably, an individual could work one hour a year and still be considered “employed.” While that situation is highly unlikely, there is no rule, for instance, that an individual needs to work 40 hours a week for the exception to apply.

Indeed, the tax law, Mr. Slott adds, doesn’t even mention the words “still working;” rather, it simply says that RMDs can be delayed until April 1 after the year the employee “retires.”

Of course, there are wrinkles. The still-working exception doesn’t apply to an individual who owns more than 5% of the company that sponsors the 401(k). Plus, the exception applies only to the retirement plan of the company where you’re currently employed. It doesn’t apply to other/earlier company plans. And, again, it never applies to IRAs.

Finally, spend some time learning where the presidential candidates stand on Social Security reform.

As we have noted in a number of columns and articles, Social Security is facing a financial shortfall. Unless Congress acts beforehand to overhaul the program’s finances, Social Security’s trust fund will run out of money in 2035. At that point, beneficiaries would receive only about 75% of their promised monthly checks.

The Center for Retirement Research at Boston College has assembled a chart that compares the presidential candidates’ proposed changes to Social Security. The center plans to update the information regularly throughout the campaign season. While you’re on the site, also check out the “Social Security Fix-It Book,” a guide to understanding the problems and leading proposals to fix them.

Mr. Ruffenach is a former reporter and editor for The Wall Street Journal. His column looks at financial issues for those thinking about, planning and living their retirement. Send questions and comments to