As life progresses, you’ll go through a number of stages, from being a teen to an adult, getting married, retiring, welcoming grandchildren and more. Every time you move through a stage, your estate plan should too.
Bankrate’s recent article, “Estate planning triggers: When to re-evaluate your estate planning strategy,” says the risk of not having a current estate plan, trust, and will that state your wishes is significant. When people fail to put any plan into place, it leads to confusion, chaos, and unintended consequences. Use this list of important life events as triggers to remind you to discuss your current situation with a trusted attorney.
Getting married. You and your future spouse probably have had some financial conversations before getting engaged. However, if you haven’t, once wedding plans are set, it’s vital to discuss all aspects of each partner’s financial situation and the desired distribution of assets. You should decide whether to sign a prenuptial agreement, the totals of your separate and joint assets and who you want to inherit those assets should one or both spouses pass on. In light of these factors and the prenuptial agreement, an estate plan that satisfies both parties must be created.
Starting a family. The decision to have a child comes with the responsibility of planning for that child’s care. You and your partner will want to determine the amount of your assets you want to pass to your children in the case of a death, at what age your children will inherit those assets, and name a legal guardian. When your children reach 18, they will need their own estate planning documents like a durable power of attorney and health care proxy.
Divorce. If a couple decides to divorce, it’s important to update their separate estates. If you fail to change the beneficiary designations for a trust or life insurance policy after getting divorced, your ex-spouse may receive the life insurance that was supposed to be paid out to the trust to provide liquidity to pay off debts and administration expenses.
Retirement. Beneficiaries are named when setting up a 401(k) or Roth IRA account. If you started the account years ago, the beneficiaries may be out-of-date. Retirees should look at their total retirement assets and update their beneficiaries to reflect their current relationships and financial circumstances.
Assets. One thing that always changes are assets. Values fluctuate, assets are acquired and sold, and new accounts are opened just to list a few. Since the most important information that needs to be known at the time of your death regards your assets, it is imperative that assets not only be aligned with the estate plan up front (assets retitled, and beneficiary designations changed), but they are also tracked for value changes and other asset changes. These all need to be reported to your estate planning attorney. This should be done on an annual or bi-annual basis and is a cornerstone of our client care program. We take the burden off you to help ensure your estate plan remains up to date.
More reasons to review an estate plan. Some of the changes in life are planned, and others are completely out of our control. A new tax law, like the one that passed in 2017, means that many provisions in an estate plan may be out of date. Moving to another state, or the death of someone in your estate plan, or any major life events should be followed by a review of your estate plan.
You may find that you don’t need to make any big changes, or that a major revision is necessary. Whichever situation occurs, you’ll want to take care of it while you are alive and well.
At Family Estate Planning Law Group, part of ongoing client care program involves continually aligning and verifying your assets consistent with your estate plan. We know you will experience life changes, and our model is designed to fit those. We have a flat rate, because the natural course of life shouldn’t be billable.
Reference: Bankrate (March 4, 2019) “Estate planning triggers: When to re-evaluate your estate planning strategy”