When was the last time you reviewed your Estate Plan?
Even if you have a sound estate plan in place, it canbe worthless for the people you love ifnot regularly reviewed nor kept up to date. Most people believe their estate plan is done when they sign a will, trust, power of attorney or a living will, but estate planning is a lifelong process. Your life will inevitably evolve as changes to laws, assets, family, and goals happen. In absence of any major life events, we recommend reviewing your estate plan annually to ensure it is current and still reflects your desires.
These are the four questions that you should ask yourself during an Estate Checkup.
Has your family or household changed?
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Marriage: Marriage instantly changes your legal status. Regardless of whether it is your first marriage or fifth, you must take the proper steps to ensure your estate plan properly reflects your wishes and needs.
- In some states, marriage invalidates a will written before the marriage, while in others the old will stands even if your new spouse is omitted.
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Divorce: Divorce is a very stressful life event and estate planning is often overlooked by these dramatic changes, but failing to update your plan can cause devastating consequences.
- We recommend that once divorce proceedings begin, you will want to ensure that your future ex is no longer eligible to receive any of your assets or make financial and/or medical decisions on your behalf, unless you would like them to retain the power. When the divorce is finalized, and the property has been divided, then we will need to adjust the plan to match changes in assets and living situation.
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New family member/s: Welcoming a new addition to your family is a joyous occasion, but it also demands entirely new levels of planning and responsibility. We recommend that you immediately name both a short and long-term guardian/s for your child.
- After legally naming your guardian/s, you should consider utilizing an estate planning vehicle, such as a revocable living trust to manage the inheritance in accordance with your instructions. This is your opportunity to ensure that future inheritance will be used in the manner that you so desire. You can write specific language within the document that can limit the beneficiary’s access to the assets or even incorporate financial incentives to keep the beneficiary motivated as they grow up. You can even create scheduled distributions based on age attainment, which can be utilized to ensure the beneficiary receives the funds when they are financially mature and able to make fiscally sound decisions.
- Death of a loved one: Your current estate plan may assign important roles like power of attorney and executor to individuals who are now deceased or unable to carry out those duties. The death of a family member, partner, or close friend can have serious consequences for both your life and estate plan. If the person was included in your plan, you will need to update it by naming new beneficiaries, executors, and guardians. We need to properly address voids that the death in the estate plan creates as soon as possible. We recommend reviewing your life insurance policies, pensions, and retirement accounts to ensure beneficiary designations have been properly updated.
Have you relocated to a new state?
- Since estate planning laws can widely vary from state to state, if you move to a different state, you will need to review and/or revise your plan to comply with your new state’s legal requirements. It is important to note, that financial institutions and healthcare providers may more readily accept an in-state power of attorney opposed to an unfamiliar out-of-state one. The individuals that you have named as executor and power of attorney may have a difficult time filling these duties if they are now no longer residing in the same state.
Have your assets changed?
- Whenever your net worth dramatically increases or decreases, you should revisit your estate plan to ensure it still offers the maximum benefits and protection for yourself and your loved ones. Whether you inherit a fortune, take out a new loan, or change your investment portfolio, your estate and financial plan should be adjusted accordingly. As your wealth grows, you may benefit from drafting a trust, as a trust can help manage estate taxes, avoid probate, provide for children and plan for long-term care.
Tax and estate planning law changes can vastly affect your estate plan. A rule of thumb is to review your estate plan with an estate planning attorney every five years, even if you do not think it needs to be updated.
We at Coral Gables stand apart by developing relationships with you and your family that lasts not only for your lifetime, but the lifetime of your children. Furthermore, we are here to serve your entire family. We enjoy getting to know your family members and including them in the planning process, which allows the whole family to be informed on your latest planning strategies and why you made these decisions. Ultimately, with family members being well versed on your plan will not only reduce any potential conflict, but they will know exactly where they stand or what they need to do if something were to happen to you. As always, we welcome the opportunity to review your investment portfolio and estate planning documents.