Life is about changes, both good and bad. Children grow up and marry and have children of their own. Families experience the pain of divorce. New families are created when divorced parents remarry. Many of these changes require revisiting and making changes to your estate plan. Even when your family life is stable, laws change and can impact the best of estate plans. An estate plan needs to be reviewed and changed as family situations, laws or other factors change. Here are some common points when estate plans need to be reviewed.
There are certain life events that call for your estate plan to be reviewed, detailed in"9 Life Changes That Require An Estate Plan Review." from the Huffington Post. Some of the events are happy times, like the birth of a grandchild. But whether they are happy or sad, they all require that you take the time to review your estate plan to ensure that your loved ones are protected and that your wishes are carried out in the event of your death or if you become incapacitated.
Marriage. Did you know that your spouse may not be the sole beneficiary or heir of your estate?Depending on where you live at the time of your death, this may be unknown without a solid estate plan. To ensure your spouse, or anyone else gets certain belongings from your estate, you need to detail this in your plan. When you wed, you should review your estate plan and make any necessary adjustments.
Remarriage. A marriage license typically doesn't set up your new spouse to receive your entire estate after your pass away. The laws of most states say that your new spouse will share in your estate assets along with your children from your first (or previous) marriage unless you change this in your will, living trust, or other estate planning document. If you get remarried, it's critical that you update your estate plan to add your new spouse and any of his or her stepchildren should you want them to inherit from you.
Divorce. Typically when a divorce decree is entered, the laws automatically disinherit a former spouse. Nonetheless, if you included provisions in your estate plan that give specific property to your former spouse by name, make sure to change this to disinherit him or her.
Birth of a Child. This big change definitely qualifies for an update of your estate plan to protect your child or children. You need to nominate guardians to care for your children in case something happens to you. If not, your children will be cared for by guardians appointed by the court. That could be anyone. Same thing applies if you adopted a child. Designate a guardian to care for your child in your will.
Death of a Beneficiary. Updating your estate plan may be the furthest thing from your mind if this should occur. However, it's important. If your beneficiary dies, you will need to ensure your estate plan still does what you want, such as if the beneficiary had children and you want his or her portion to go to them. You'll typically need to talk to your estate planning attorney to make sure that happens.
Illness or Disability. One often overlooked aspect of estate planning is illness or disability. There are lots of things to consider regarding your care, and you need to articulate your desires before you become ill, disabled, or incapacitated. This can save your loved ones heartache. In addition, you need to think about the situation if you passed away and one of your beneficiaries became incapacitated. Money from your estate could actually harm them by causing him or her to be ineligible for needs-based government care programs. You need to look at a special needs trust. Plan for both of these scenarios by updating your estate plan before anything happens.
A Substantial Increase in Assets or Income. If you have more money or assets now than when you first created your estate plan, then that is a good thing up to a point. That point is when you and your beneficiaries are subject to federal or state estate taxes. Your estate planning attorney can structure your estate to minimize these taxes and keep more money for your estate.
Moving to Another State. Every state has its own unique set of estate laws, so you should talk to your estate planning attorney.
Changes in the Law. State and federal tax and estate laws are always changing. When this occurs, your estate plan may be at risk.
Review your plan with your attorney to make sure everything is OK.