One truth of life I have noticed in my 56 years on the planet is this - one of the only constants in life is change.
Change is all around us.
Whether it is seasons, personal relationships, finances, the economy, politics and the Royals amazing turnaround ... change is all around us.
Shhhhhh.
I think your estate plan may have changed, too.
Have you made appropriate changes to keep it current?
Against this backdrop, we turn to a recent article in The Huffington Post titled “9 Life Changes That Require An Estate Plan Review.”
These nine life changes, if nothing else, signal when you should update your estate plan.
Marriage.
Did you know your spouse may (or 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 an unknown without a solid estate plan.
To ensure your spouse, or anyone else gets certain belongings from your estate, you need to detail your intentions in your plan.
So, when you say I do, be sure to review your estate plan and make any necessary adjustments.
Remarriage.
A marriage license typically does not entitle your new spouse to receive your entire estate after your pass away.
In fact, the laws of most states provide 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.
Without careful planning, someone you love may be unintentionally disinherited (or inherit unintentionally).
Can you say lawsuit?
If you get remarried, it is 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 providing specific property to your former spouse by name, then you may want to make changes to disinherit him or her.
Note: Special attention must be paid to any ERISA retirement plans (think profit sharing or 401k plans). The beneficiary named at your death may inherit, even if state law disinherits an ex-spouse.
Birth of a Child.
This big change.
Be sure to update of your estate plan to protect your newly-added child or children.
You also need to nominate guardians to care for your children in case something happens to you. If you fail to do so, then your children will be cared for by guardians appointed by the court.
Not good.
That could be anyone.
Same thing applies if you adopted a child.
Consequently, the original article correctly recommends that you designate a guardian to care for any minor children under your will.
Period.
Death of a Beneficiary.
Updating your estate plan may be the furthest thing from your mind.
If a beneficiary dies, you will need to ensure your estate plan adjusts accordingly.
For example, if a child dies leaving behind children of his or her own, do you want that share to pass down that bloodline?
If yes, then you will need to confirm that your plan provides for this.
Illness or Disability.
The original article notes that an overlooked aspect of estate planning is illness or disability.
There are lots of things to consider regarding your own care, and you need to articulate your desires before you become ill, disabled, or incapacitated.
For instance, do you want to receive care in your own home for as long as possible?
Write it down.
This seemingly simple step can save your loved ones unnecessary heartache.
In addition, you need to think about a scenario in which one of your beneficiaries becomes incapacitated after your death.
Money from your estate could actually harm him or her by causing ineligibility for needs-based government care programs.
You need to look at "contingent" special needs trust provisions as part of your estate plan.
A Substantial Increase in Assets or Income.
If you have more assets now than when you created your estate plan, then that is a good thing up to a point.
So, what is that point?
That point is when you and your beneficiaries are subject to federal or state estate taxes.
Your estate planning attorney can help structure your estate to minimize (or even avoid) these taxes and keep more money for your estate.
Moving to Another State.
We are a mobile society. [Did I tell you I am a master of the obvious?]
As a result, a review is in order should you relocate across state lines or across the country.
Every state has its own unique set of estate laws, so you should talk to your estate planning attorney.
Changes in the Law.
Remember, change is one constant is life. Well, state and federal tax and estate laws are always changing.
When this occurs, your estate plan is at risk.
Bottom line: Review your plan with your attorney to make sure everything OK.
We recommend every two years, which is why we sent our "estate review reminder" letter to every client household in October of every odd numbered year.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
Reference: The Huffington Post (August 17, 2015) “9 Life Changes That Require An Estate Plan Review”
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