An estate plan is not something you can set in place and then forget. When your life undergoes a significant change, you probably need to make some adjustments to ensure that your plan still functions the way you want. Let’s review a few major life events that provide good reasons to update your estate plan.
1. Marriage or Divorce
The presence or absence of a spouse could have a tremendous impact on how your estate is eventually divided. If you get married, you’ll want to ensure your spouse is cared for after you pass on. Of course, if you get divorced, you will probably want to re-allocate this money to another beneficiary.
2. Children and Adoption
Children are a blessing, whether they are your biological children, step-children, or children by adoption. Revisit your will and other documents to make sure they include all of your children. State intestacy laws might ensure that each of your children can receive something from your estate, but the government may not divide your assets the way you want if you don’t have a written estate plan in place.
3. Buying or Selling a Home
The purchase or sale of real estate can dramatically impact the value and liquidity of your estate. It has a trickle-down effect, affecting the inheritance that each of your beneficiaries can expect to receive. After purchasing real estate, you may also want to consider establishing a living trust, especially if you own property in two or more states. With a living trust, your property could be transferred directly to your beneficiaries after your death, which could ensure that your house and property don’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. Such changes should be reflected in your estate plan so that your executor has an accurate list of your financial assets. This way, you can also guarantee that the money in these accounts will go to your beneficiaries.
5. Starting or Selling a Business
Business succession planning provides an outline of the way that your business is managed. You may need to establish or update your plan 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. Since laws vary from state to state, there are no guarantees your estate planning documents fulfill the requirements of your new home.
The sad truth is there is always the possibility you may outlive some people named in your estate documents. Whether it is a beneficiary, 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 business if you become incapacitated. Make sure your current wishes are reflected in your estate planning documents and that you have completed all the documents you need.
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.