When Should You Update Your Estate Plan?

Anyone who has worked with an attorney may be familiar with our go-to answer, “It depends.” This carries a little frustration for some, however, but it applies in a variety of situations and, I think my peers would agree the phrase continues to be relevant because we want to provide honest, no-nonsense advice.

Simply put, there is no such thing as a one-size-fits-all approach to many aspects of the law, especially in the area of estate planning. Here at Adam Tobin Law, we understand that circumstances, relationships and situations are constantly changing and what is appropriate for one client may not work for another.

With that in mind, we listen carefully to the needs of our clients and develop a strategic estate plan based on their individual requirements and goals. When situations and circumstances change, we revisit the plan and make adaptations that more adequately reflect current needs. The idea is that an estate plan should not be static and it should be modified to suit a variety of life events and changes, such as the ones listed below.

Marriage, Death and Divorce

If you have been divorced recently, you may not want your ex-spouse named as a beneficiary to your IRA, 401(k) or life insurance. What many do not realize when they designate a beneficiary is that, by doing so, the beneficiary designation may supersede the will. This just means the beneficiary will receive the funds regardless of what may be specified in the will.

It’s important to note that bank accounts can also have designated beneficiaries. These individuals can be named on a payable-on-death form. For accounts that are outside the will, the assets will go into probate court if there is not a named beneficiary or the individual is deceased.

Naming a contingent beneficiary is therefore essential. Similarly, you may have gotten remarried recently and want to name your new spouse as a beneficiary.

Another situation that occurs more frequently than many realize is the death of a named executor to the will. This would obviously have an impact on the estate plan and necessitate its modification.

Children and Grandchildren

Without question, adding children and/or grandchildren to the family is a happy event. Revising your estate plan to specifically name these individuals can help to eliminate confusion and potential lawsuits after your death.

Maybe there is a new in-law in the mix and you want to ensure family assets stay in the family. Maybe there are new stepchildren and you would like to allocate some assets to them specifically. Maybe there is family member with some issues that no longer interacts with the family or is no longer trustworthy and you want them removed.

Some of your heirs may not be very good at managing finances and you may worry about what would happen to them and/or the funds in the event of your death. In a situation such as this, or a case where the children are young, setting up a trust may be appropriate.

With a trust, the assets are held for the benefit of the beneficiary or beneficiaries you designate. Importantly, setting up a trust allows you to specify the terms and timing by which they will be able to receive the funds.

If your kids are grown, you may want to name them as an executor, give them power of attorney, or name them as a health care proxy to ensure your wishes for care/end of life are met in the event you become incapacitated. These events would necessitate a revision of your estate plan.

Falling Out or Fading Away

Unfortunately, it’s not all that uncommon for people to have a falling out with family members or trusted friends. Having an important relationship simply fade away without much explanation can be similarly frustrating.

If a family member is estranged or no longer trustworthy, or there is friend that no longer deserves that designation, it may be time to update the estate plan to remove them from it. If there is no one else to give the funds and/or assets to after your passing, you may want to update your plan so that a favorite charity receives a financial windfall.

It is also worth noting that the role of executor carries a variety of important responsibilities, including the disbursement of assets and debt payments, as well as potentially supervising the sale of your home. The individual you initially named in your estate plan may no longer be able to handle the responsibility due to a life event or other factors, so you may need to revise your estate plan.

Relocations

The laws associated with estate plans can vary state to state. Some of the differences include power of attorney rules, end of life stipulations, medical directives, and more. Also, some states have inheritance and/or estate taxes, so if you moved out of one of these areas to a new state where the old rules no longer apply, you need to be able to provide legal documentation of your new residency.

If not, your old state may try to obtain a tax payment from your heirs out of the estate. Along the same lines, if you own or recently purchased a vacation home in a different state, there may be implications for your estate plan.

Although this was directed at individuals who already have an estate plan, which typically includes a will, living will, health care proxy/power of attorney, a financial power of attorney, and many other items, here at Adam Tobin Law, we can also help you create one from scratch based on your individual goals and preferences. Protecting the assets you have worked a lifetime to build and ensuring that they go to the individuals you care about the most is the ultimate goal, of course, and we’re passionate about helping our clients make that happen.

To create or update an estate plan, connect with us today for a complimentary consultation.