One of the biggest mistakes that someone can make in terms of estate planning is not updating their plan after certain life events. There are several common life situations that may require you to update your estate plan:
You moved to another state. Estate planning laws vary state by state. Make sure that when you move from one state to another, you ask a local estate planning attorney about any important differences. Some documents that may need to be updated include your Power of Attorney, advance medical directive, and living will. If these are not updated after an interstate move, they could be less effective, or altogether ineffective.
Changes to beneficiaries. If you are considering changing your beneficiaries, you should review your estate plan. This is because there are many factors that determine whether an asset passes by a Will, beneficiary designation or otherwise at death. A cohesive estate plan will consider all relevant factors to ensure all assets pass to your beneficiaries as intended. Additionally, if any of your beneficiaries’ lives changes in a way that require a different level of care, you may want to accommodate those needs by revising your estate plan.
Your assets or liabilities change. When there is a change in your assets or liabilities, it affects the value of your estate which could impact your tax liability. Fortunately, there are estate planning opportunities to minimize such tax impact. Further, how you title your assets, whether in your own name, or jointly with another person, affects how that asset passes at death. If an asset is added or removed from your estate, it is time for your estate plan to be reviewed.
Your qualified retirement plan is outdated or moved to a new IRA custodian. A huge mistake that you can make in estate planning is failing to update the beneficiary designations of your retirement plans (IRAs, 401(k)s, etc.). On the retirement plan’s designation form, you want to make sure that the beneficiary of these accounts is clearly outlined. Beneficiary designations control who receives annuities, life insurance, some financial accounts, and other assets at death, which passes outside of a will or trust.
Changes in finances or business interests. When there is a significant change in your financial situation or business interests, then it is time to update your estate plan. For example, if you are buying or selling a business, or starting a new business, it’s time to update your estate plan to account for what happens to that asset at death or upon incapacity. Another event that would require a prompt review of your estate plan is if there are significant changes to your employment and/or income.
Marriage or divorce. Updating your estate is extremely important when you get married or divorced. When you get married, you want to make+ sure that your estate plan includes your new spouse. On the other hand, you want to make sure you remove your spouse from your estate during separation or pending divorce. Although many states disinherit an ex-spouse from your estate plan automatically upon divorce, this is not always true during separation and before your divorce is final. Updating your estate plan to remove your soon to be ex-spouse avoids the possibility of your ex-spouse receiving any of your assets.
Children. If you have children it is important that you update your estate plan accordingly. Your estate plan will determine how your children are taken care of—and who their guardian should be—should you die or become incapacitated. This also applies if you marry someone who already has a child: you want to make sure that you include your stepchildren in your estate plan. When a new grandchild is born, you may also want to update your estate plan.
To learn more about updating your estate plan, do not hesitate to contact the dedicated team at Caress Law either by calling (503) 292-8990 or using the contact form on our website. Caress Law, PC also offers a Family Protector Program, which is a monthly program designed to ensure your family is protected now, and in the future. Contact us to learn more about this valuable program.