Life Events that May Require a Review of Your Estate Planning
Estate planning is never a one-and-done type of a deal. You may have a totally solid estate plan in place today, but it can be worthless with time if you do not update it.
Regardless of who you are, your life circumstances will evolve continuously as your finances, family situation, goals and the law may change, necessitating the need to update your estate planning documents. If you do not experience a major life event, you should review your estate plan at least yearly to update its terms.
However, numerous life events prompt you to update your estate plan to save your loved ones from conflicts and court cases. Below are some major life events that require you to review your plan immediately:
Marriage
Marriage is a unique rite of passage that changes both your relationship and legal status. Whether it is your first or third marriage, you should ensure that your plan explicitly reflects your current needs and wishes.
Depending on the state you lived in at the time of death, your spouse may not be the sole beneficiary of your estate. You need a solid estate plan to determine who is entitled to benefit your death clearly; for instance, if you want your spouse or anyone else to inherit specific belongings from your estate, you have to outline it clearly in your estate plan. If you have stepchildren, you must explicitly name them in your estate plan to avoid conflicts upon your death you die.
Divorce
The laws of most states automatically disinherit your former spouse once a court enters a divorce decree. However, you may need to change your estate plan if you had included provisions that give a specific property to your former spouse by name.
Death of a Beneficiary
You should review your estate planning documents when your spouse or any beneficiary dies to fill the gap that their absence creates. This event prompts you to change beneficiaries and trustees as well as changing Power of Attorney (if your spouse dies).
You Give Birth or Adopt a Child
Having a baby or adopting a child triggers you to review your estate planning documents. This event allows for proper long and short-term guardians to be appointed in the will and inheritance provisions to be created in your trust. A trust helps you specify the ages at which the young beneficiary inherits your assets, while a will releases the proceeds when the beneficiary becomes an adult.
You Get Seriously Ill or Injured
Illness and disability are among the most overlooked aspects of estate planning. If you get involved in a life-changing accident or you have been diagnosed with a life-changing disease or condition, you may need to review the individuals you chose to handle your health care decisions and update the way those decisions should be reached. Ensure that your plan reflects your current wishes as you can change the person you nominate as your healthcare proxy from time to time.
Trustees or Executors Become Inappropriate
When you appoint the people who implement your plan and determine how successful it is, you should always reconsider if they are still able to execute the job as you would want it done. If you currently have a better choice, you should appoint them as your executors or trustees.
Relocate to Another State
You should note that estate planning laws differ from one state to another. Some differences are trivial; states laws vary regarding the number of witnesses needed for your will to be valid. Other variations are substantive; for instance, some states have estate or inheritance taxes.
State laws also vary on other estate planning elements, including the powers of attorney, living wills, and advance medical directives. You need to review and update these documents if you move to another state; otherwise, they may make your will ineffective.
A Substantial Change in Your Income or Assets
If you get a significant increase in pay or buy a new home at a substantial amount of money, you need to update your estate plan. These two events subject you and your beneficiaries to state and federal taxes or may subject you to costly estate administration proceedings. You should minimize these taxes by structuring your estate properly.
The value of your estate may also dramatically decrease. This event also prompts you to review your plan to ensure that it still offers the maximum benefits and protection for you and your beneficiaries
You should revisit your estate plan and adjust it accordingly when you take a new loan or mortgage, change your investment portfolio, or close your business.
Getting Started
Proper estate planning will keep your loved ones out of court and conflicts. Contact us to help you create a comprehensive estate plan. If you already have one, we can always help you review and update it to avoid conflicts when you die.
You can always count on us to guide and support you in reviewing and updating your estate plan regularly. This review puts you at ease as you ensure that your loved ones are protected no matter what happens.
If you need any advice, inquiry, or consultations on your estate plan, do not hesitate to contact The Mattar Firm. Our experienced estate planning attorneys are always willing and happy to serve you. As always, our consultations are free.