Why Updating Your Estate Plan After a Major Life Event is a Good Idea
An estate plan is not necessarily something you can create and then forget. When your life undergoes a significant change, you likely need to make some adjustments to your estate plan to ensure that it still meets your goals. Let’s look at a few major life events that provide good reasons to review and update your estate plan.
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9 Major Life Events That Should Cause You to Update Your Estate Plan
1. Marriage or Divorce. The presence or absence of a spouse could have a tremendous impact on the way your assets will be distributed upon your passing. If you get married, you’ll likely want your spouse to be the beneficiary of your estate, or if it is a second marriage, you may want to assure that your children from a previous marriage are provided for along with your new spouse. Of course, if you get divorced, you will usually want to remove your former spouse as the beneficiary of your estate plan, as well on your retirement assets, pensions, and life insurance policies.
2. Children and Adoption. Children are a blessing, no matter how they become part of your family. An adopted child is your heir at law, but a foster or stepchild will need to be named in your estate plan to be a beneficiary. A child with a substance abuse issue, a disability or a pending bankruptcy should be provided for a bit differently in your plan. Revisit your trust, will, and other documents to make sure they include all of your children in the way that you desire.
3. Buying or Selling a Home. The purchase or sale of real estate can dramatically impact the value and liquidity of your estate. This has a trickle-down effect, affecting the value of an inheritance to a group of beneficiaries. After purchasing real estate, you should establish a revocable living trust to hold your property to avoid probate. With a living trust, your property can be transferred directly to your beneficiaries after your death and be divided proportionally, taking into account an outstanding mortgage or equity line of credit. A trust also ensures that your real estate doesn’t wind up mired in probate court after your passing.
4. New Financial Accounts. Changes in your finances—such as receiving an inheritance—might prompt you to open new financial accounts. This should be reflected in your estate plan so that the money in these accounts will be appropriately distributed to your beneficiaries. Transferring title on a new account into your trust will avoid probate and distribute the account according to the terms of your trust plan while also avoiding probate. If you do not have a trust, you may want to add a joint title owner onto your account or add a beneficiary designation to avoid probate. The decision of how you title a new account requires consideration of how it will affect your estate plan.
5. Starting or Selling a Business. Business succession planning provides an outline of who will own or manage your business after you. Do your current business documents state who will manage it in case of disability or who will inherit your business or be given a first right of refusal to purchase it? You may need to establish or update your estate or business plan to include business succession planning to avoid confusion when changes in business leadership occur.
6. Moving to a New State. When you move to another state, you should also plan to review your estate documents. Although estate documents created in one state should be valid in your new home state, they may be more difficult to use and require a higher level of scrutiny. Since laws vary from state to state, especially estate and inheritance tax laws, there are no guarantees your estate plan documents are the best fit for you as a resident of a different state.
7. Death. The sad truth is there is always the possibility you may outlive some people named in your estate plan. Whether it is a beneficiary, personal representative, executor, appointed guardian, or even a health care proxy, make sure to update your relevant estate planning documents to fill any gaps created by the unfortunate loss of a friend, partner, or family member.
8. Medical Condition. A serious medical diagnosis or sudden accident should prompt an urgent review of your estate planning needs. It may be time to change your designations regarding who you want to handle health care decisions or financial decisions if you become incapacitated. Make sure your current wishes are reflected in your estate plan, that you have completed all the documents you need, and put them on file at all medical and financial institutions who will rely on them upon your incapacity.
9. Change in Wishes. What you want for your estate plan today might not be what you want in the future. If you’ve had a change of heart regarding how you want your estate handled, you should work with your attorney to make sure your wishes are properly documented.
Let Us Help You With Estate Planning
Planning for the future is an act of kindness for your loved ones and provides you with peace of mind. Let the staff at Attorney Wendy Guthro, Attorney & Counsellor at Law help you through the estate planning process so that you’re prepared for whatever lies ahead. Contact us today for assistance with estate planning, estate administration, and elder law issues.
Kathleen Delaney Campbell has been a trusted team member at our firm for over eight years. She is the owner of KDC Accounting Solutions, an accounting practice specializing in QuickBooks and Quicken consulting. With a bachelor’s degree in accounting from the University of Massachusetts/Lowell and over 30 years of experience working with small businesses across multiple industries, Kathleen supports GuthroLaw in maintaining probate and trust accountings and works with clients' accountants and CPAs to facilitate tax filings.
In addition, Kathleen instructs individuals and families how to use Quicken to manage their personal and household finances.
Kathleen lives in Winchester, MA with her husband, daughter, and their dog. She is actively engaged in service to her community and when time permits, enjoys sewing, gardening, and cooking.
Word of the Month
having infinite awareness, understanding, and insight
possessed of universal or complete knowledge
One who is omniscient literally knows all.
"You'll need to tell me when you don't understand something I've said. I'm not omniscient, you know."
Omniscient entered English at the beginning of the 17th century.
Omniscient brings together two Latin roots: the combining form omni-, meaning "all" or "universally," and the verb scire, meaning "to know."
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Attorney and Counsellor at Law
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