Estate Plans Age Too: How to Keep Yours Fresh and Effective
Your estate plan is one of the most important sets of legal tools you will ever create. An estate plan is designed to protect you, your loved ones, and your money and property. It can minimize taxes and fees and ensure that your loved ones are taken care of. Depending on the estate planning tools you use, it can also keep your personal matters out of the court system and away from prying eyes. However, an estate plan is not a “set it and forget it” set of legal tools. While estate plans are designed to have some flexibility, they are created at a specific moment in time and need updating as your life changes. If your plan has not kept up with your life, it could fail when you need it most or perform differently than intended.
If anything in the following eight categories has occurred in your life since you signed your estate planning documents, call us now to discuss how we can ensure that you and your family are still protected.
1. Marriage, divorce, death. Have you married, divorced, or lost a loved one? Each of these major life events often requires a complete review of your estate plan to ensure that your money and property will go to the people you want, in the way you want. Your spouse has likely been assigned many roles in your estate plan, such as beneficiary, trustee, executor or personal representative, and agent under powers of attorney. A change in marital status or the loss of a spouse means that it is essential to review and update all these appointments so your plan reflects your current wishes and your new family structure.
2. Change in financial status. A substantial change in your financial situation—whether positive or negative—generally requires an update to your estate plan. Financial shifts may happen when you retire, buy or sell a business, receive an inheritance, acquire or lose substantial assets, or win the lottery. Your plan should always reflect your current financial reality to ensure that your wealth is protected and distributed according to your wishes.
3. Birth or adoption of a child or grandchild. The birth or adoption of a new child or grandchild is a joyous occasion—and an important time to update your estate plan. You may want to revise your plan to include continuing trusts in your revocable living trust, gifting trusts, 529 education plans, or Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts. If you are a parent, it is also important to nominate the person you would want to be the legal guardian for your minor child(ren) if you become unable to care for them yourself. We can help you update your plan to include your new family members and explore options to secure their future.
4. Change in circumstances. Relationships and life situations can shift. When those changes affect the people named in your estate plan, it may be time to review your beneficiaries and your chosen decision-makers, including your personal representative, trustee, or agents under your financial and medical powers of attorney. Consider reviewing your plan in the following situations:
● Children or grandchildren reach adulthood and become eligible and capable enough to serve in trusted decision-maker roles
● A decision-maker moves away, passes away, becomes estranged, or is otherwise unable or unwilling to continue serving in their role
● A beneficiary passes away or becomes estranged
● A beneficiary or decision-maker develops issues such as overspending, substance abuse, or gambling problems
● A beneficiary becomes disabled and requires special planning tools to maintain eligibility for means-tested government benefits
● Guardians for minor children divorce, move to a new state, or are otherwise no longer suitable or willing to serve
5. Changes in venue. Moving from one state to another or purchasing a second home in another state always warrants an estate plan review. State laws differ, and you want to ensure that you are taking full advantage of, and not being penalized by, your new state’s laws.
6. Outdated powers of attorney. Your will takes effect only after you die, but your financial and medical powers of attorney are essential for protecting you while you are still alive. They allow you to name trusted individuals who can make financial and medical decisions for you if you become unable to manage your affairs. If you have been relying on the same documents for years, it is time to check them. An outdated document could mean that the person you now trust most to make crucial medical or financial decisions for you is not legally authorized to act. You could end up in a situation where the wrong person has legal authority to act for you or, worse, where a court must appoint a guardian or conservator. That process can be costly, stressful, and public.
7. Unreviewed beneficiary designations. Many people are surprised to learn that retirement accounts, life insurance policies, and annuities are not automatically governed by your will or trust but will instead pass directly to the individuals named on your beneficiary designation forms. If you have experienced a major life event, such as marriage, divorce, or the death of a loved one, failing to update these designations could result in your money going to the wrong person. It is important to confirm that all beneficiary designation forms have been properly completed and filed. If a designation is missing or incomplete, a court may need to determine who receives the funds according to state law, which could lead to unintended results. Regularly reviewing and updating these designations helps ensure that your assets go exactly where you intend.
8. Acquisition of digital assets. Your digital footprint may be as valuable as your other accounts and property. Your estate plan should include clear instructions for how to access, manage, and transfer your digital assets such as social media accounts (especially if they generate income), email accounts, digital photos, and cryptocurrency. Failing to plan for these assets can create confusion and potential loss. Instead of leaving your digital legacy to chance, make sure that your plan reflects your online world as well as your physical one.
Estate Plans Are Created to Help You, Not Hurt You
Estate plans can age. If you have experienced any of the changes mentioned above, now is the perfect time to review your plan. We can help ensure that your estate plan is fresh and up to date and continues to protect you and your loved ones. Contact us today.
