Because your life changes, so must your estate plan. As a estate planning Lawyer, I recommend that everyone reviews their estate plan every 3 to 5 years because life events that you might not even think about could impact how your estate plan works.
While this periodic review is important, there are certain life events that should trigger an immediate review of your documents. Here are seven examples:
- You move out of state. If you move to a new state, you will want to review your estate plan. The move may make no difference in how your assets are disbursed, but depending on your new state, there could be rules or taxes and fees that would make a revision to your current plan prudent.
- You have a new baby. Whenever a new member of the family arrives, whether that’s a child or a grandchild, it’s important to update your estate plan. You will want to make sure that the new baby is protected and partakes in your inheritance if you so desire.
- You get divorced. Married couples create documents that leave most, or all, of their estate to their spouse. When you divorce, a lot of these benefits of sharing in one another’s estates are invalidated—but not all of them. Things like beneficiary designations (such as leaving life insurance to your spouse) will not be nullified under your divorce. To protect your finances from your ex, you will need to update all accounts where beneficiary designations exist.
- A family member dies. If a family member dies that was named as one of your beneficiaries, guardians, executor, agent, etc., you will need to update your estate plan to remove and possibly replace them. Also, you may want to name a secondary in case the primary dies.
- There are big changes to estate tax laws. You never know what congress is going to do, and often, tax laws change that impact your plan. If there is a major change to the laws governing inheritance and estate taxes, you will want to consult your lawyer to see how these changes affect your estate plan.
- You win the lottery. (Or experience other financial changes.) If there is a dramatic increase in your net worth due to winning the lottery, receiving a large inheritance, or making great business decisions, you will need to contact your estate planning lawyer. You will want to direct how this new wealth is handled and protected.
- You change or add life insurance, IRAs, 401(k), etc. Many people do not realize that accounts such as the ones mentioned here have a beneficiary designation allowing funds to be disbursed to the beneficiary outside of the probate process. Essentially, even though you have a Will indicating that you want all of your money to be distributed to your heirs named in the will, the funds in these accounts are not bound by the Will and will go directly to the beneficiaries named on those accounts. Before you sign any of these documents, you should consult with an <insert city> estate planning lawyer to make sure the money goes to the person you choose.
These are just some of the major life changes that should cause you to reevaluate your estate plan. If you have any concerns about whether your estate plan will do what you need it to do, call my office at 916.247.6868 and set up a consultation to discuss your situation.