When To Update Your Estate Plan

Which Life Events Should Trigger You to Update Your Estate Plan

Our lives do not remain static. One day we are young, the next we are getting older. We are single, then we marry. We marry, then divorce happens or our spouse dies. Some of us have children. We may move to different states and change jobs. Our finances and health change. All of these are life changes. These life changes answer the question of when to update your estate plan.

What is an Estate Plan?

Estate planning is the process of developing a strategy for the care and management of your estate. Estate plans cover what happens if you become incapacitated.  Estate plans also cover what happens when you die.  One commonly known purpose of estate planning is to minimize taxes and costs. This includes taxes imposed on gifts, estates, generation skipping transfer and probate court costs.

However, your plan must also name someone who will make medical and financial decisions for you if you cannot 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. Adjustments must be made in response to life events such as marriage, the arrival of a new family member through birth or adoption, a divorce, the passing of a loved one, significant changes in wealth, and relocation to a different state or country.

Marriage:

When preparing for marriage, estate planning often gets overlooked, but it shouldn't be. Even if it's not your first marriage, make updating your estate plan a priority. It's crucial to ensure that your emergency contacts are up-to-date, and that you add your new spouse to any insurance policies and health plans you have.

Updating your estate plan after getting married is crucial for another significant purpose. If you pass away, your spouse may not necessarily inherit your finances and belongings, particularly if you have kids from a past marriage, a prenup arrangement, or shared ownership of assets with an individual like a sibling, parent, or other relative.

A comprehensive estate review can ensure you and your new spouse can rest easy.

Birth or adoption of children or grandchildren:

When a new baby arrives it seems like everything changes. And, so should your estate plan. For example, your trust may not “automatically” include your new child, depending on how it is written. So, it is always a good idea to check and add the new child as a beneficiary.  Do not assume that they are included.

As the children (or grandchildren) grow in age, your estate plan should adjust to ensure assets are distributed in a way that you deem proper. A decision that appears sound when your grandson or daughter is merely four years old could appear different once you know them as a college graduate in their mid-twenties with a developed personality.

Divorce:

Some state and federal laws may remove a former spouse from an inheritance after the couple splits, however, this is not always the case, and it certainly should not be relied on as the foundation of your plan. After a divorce, you should immediately update beneficiary designations for all insurance policies and retirement accounts, any powers of attorney, and any existing health care proxy and HIPAA authorizations.

It is also a good time to revamp your will and trust to make sure it does what you want (and likely leaves out your former spouse).

Death of a Loved One:

Losing someone close to you can impact your estate plan. In the event that a guardian designated for your children passes away, it is crucial to assign a replacement quickly. Similarly, if your selected executor, health care proxy or power of attorney unexpectedly dies, it's necessary to name new individuals promptly.

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 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.

To ensure proper management of your assets, it is crucial to assess the need for any adjustments following a significant rise (or fall) in their value.

Moving to Another State:

A move to a new state or country: for most individuals, it is a good idea to obtain a new set of estate planning documents 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. We are here to help you get fully settled in and build a plan to protect you and your family.

Contact Us

For more information or help with updating your estate plan, please contact us. We would love to sit down with you. We can review your plan and your changed circumstances. We can help you decide when to update your estate plan.