Estate planning is the process of developing a strategy for the care and management of your estate if you become incapacitated or pass away. One common purpose of estate planning is to minimize probate court costs and attorney fees. Your plan should incorporate naming individuals (agents) who will make medical and financial decisions for you if you are unable to make decisions for yourself. You also need to consider how to leave your property and assets while considering your family’s circumstances and needs.
Since your family’s needs and circumstances are constantly changing, so too must your estate plan. Your plan should be reviewed regularly and must be updated when certain life events occur. These include, but are not limited to: marriage, the birth or adoption of a new family member, divorce, the death of a loved one, a significant change in assets, and a move to a new state or country.
1. Marriage: It is not uncommon for estate planning to be the last item on the list when a couple is about to be married. Actually, marriage is an essential time to update an estate plan. You’ve probably already thought about updating emergency contacts and adding your spouse to existing health and insurance policies. There is another important reason to update an estate plan upon marriage. In the event of death, your money and assets may not automatically go to your spouse, especially if you have children of a prior marriage, a prenuptial agreement, or if your assets are jointly owned with someone else (like a sibling, parent, or other family member). A comprehensive estate review can ensure you and your new spouse can rest easy.
2. Birth or adoption of children or grandchildren: A lot changes when a new baby arrives, and so should your estate plan. It’s always a good idea to check your will or trust to ensure they’re drafted in a way to incorporate the new child as a beneficiary. It’s critical to designate a guardian in your will to ensure your child is cared for by the person you desire if something should happen to you and your spouse. As children (or grandchildren) grow in age, your estate plan should be updated to ensure assets are distributed in a way that you deem proper. What seems like a good idea when your child or grandchild is a four-year-old may no longer look like a good idea once they become a young adult.
3. Divorce: Following a divorce, it’s very likely you’ll want to update beneficiaries and how assets are distributed. Also, you should immediately update beneficiary designations for all insurance policies and retirement accounts, and possibly update the agent(s) indicated on your financial and medical power of attorney documents.
4. The death of a loved one: Sometimes those who are named in your estate plan pass away. If a designated guardian dies, it is important to designate a new person. Likewise, if an appointed executor, health care agent or financial agent dies, a new person should be named immediately.
5. Significant change in assets: Whether it is a sudden salary increase, inheritance, or the purchase of a large asset, these scenarios should prompt an adjustment to an existing estate plan. The bigger the estate, the more likely there will be issues over the disposition of the assets after you are gone. For this reason, it is best to see what changes, if any, are needed after a significant increase (or decrease) in your assets.
6. A move to a new state or country: For most individuals that change states, it is a good idea to have your estate planning documents reviewed and potentially create a new set that clearly meet the new state’s legal requirements. Estate planning for Americans living abroad or those who have assets located in numerous countries is even more complicated and requires professional assistance. It is always a good idea to learn what you need to do to completely protect yourself and your family when you move to a new state or country.
Deeney Law Firm is here to help you get fully settled and build a plan to protect you and your family. We can help you determine if any updates to your plan are necessary as a result of recent changes in your life.