Life Events That Impact Your Estate Plan
Life is full of big changes—some exciting, some unexpected—but they all have the potential to impact your estate plan. Major life events, from marriage to financial shifts, can alter your wishes, legal responsibilities, and asset distribution. If you don’t review and update your estate documents accordingly, state laws or outdated instructions may determine what happens to your assets. Here are some key times when you should consider reviewing your estate plan.
A Significant Change in Assets
Whether you're receiving an inheritance, starting a new business venture, or facing financial hardship, changes in your assets can significantly affect your estate planning goals. Let's say you launch a successful startup and suddenly own substantial business assets. Your existing plan may not address how you wish these new assets to be distributed. Adjusting your plan to account for these changes can help ensure your wishes are clearly outlined and implemented.
Getting Married or Divorced
Marriage not only changes your emotional life but also your legal and financial circumstances. This event can automatically shift how your assets are distributed. Conversely, if you're navigating a divorce, it's crucial to update your estate plan immediately to prevent unintended beneficiaries, such as an ex-spouse, from inheriting your assets. Failing to do so could lead to surprising results that don't reflect your current intentions.
Death of a Beneficiary or Executor
The passing of someone named in your estate plan, whether a beneficiary or an executor, calls for an immediate update to your designations. For instance, if a beneficiary you intended to leave a portion of your estate to has passed away, your plan should be revised to ensure your other intentions are clear and carried out as you wish. Similarly, if an executor passes, you'll need to appoint a new, trusted individual to handle your affairs.
Becoming a Parent
Welcoming a child into your life is a time of joy and responsibility. It's important to update your estate plan to ensure your children are financially protected and that guardianship designations are clear in case of an emergency. The thought may be daunting, but establishing these plans provides your family with security and peace of mind.
Moving to a New State
When relocating, you might not think of your estate plan immediately, but estate planning laws vary from state to state. Moving can sometimes mean your current plan doesn’t comply with local laws. For example, a trust valid in one state might not be recognized in another. Therefore, it's critical to update your will, trust, and other documents to align with the laws of your new residence.
Estate planning is more than just drafting a will; it's about ensuring your life's work and responsibilities are cared for according to your wishes. Regular reviews of your estate plan, approximately every 3-5 years or after any major life change, can help in keeping things current. Consulting with an estate planning attorney can provide valuable assistance in navigating these changes smoothly. They offer the expertise required to address your unique situation and ensure your legacy is secure for the future.