Estate planning allows you to reflect on your family, your priorities, and what actions you can take now to secure your future and that of your loved ones. If we have learned anything these past few years, it’s that life is fleeting. Amid such uncertain times, many of us have realized what – and who – truly means the most to us.
With proper estate planning, you can find the thoughtful support you need to make choices that best suit your specific situation. If you have previously gotten estate planning documents done for you and your family (such as a will or a trust), your documents can be in effect for the rest of your life. Although they don’t expire, your life situation may change, making it heedful to review them every 5 years.
Start by asking yourself these three critical questions …
1. What life changes have I experienced over the last few years?
Significant life changes are a good reason to assess if prior estate planning documents you have in place need to be updated.
Have any of the following happened to either yourself or your family members?
– Marriage or divorce
– Loss of loved one
– Receipt of major new assets, such as a home or an inheritance
– Loss of capacity
– Disability or chronic illness
– Births of children or grandchildren
It is important to revise documents in case these major changes have not already been accounted for. Maybe you want to put money aside for a new grandchild’s college fund, or put money into a Special Needs Trust for a loved one who now has a disability. Maybe you want to transfer a new property into your Revocable Trust.
If you have recently come into greater assets or an inheritance and never had an estate plan, now is the best time to put one in place. You may now be the owner of new property or be in receipt of insurance proceeds, savings, or other funds. If something happens to you, what would you like to happen to these assets?
2. Should I change who gets what role?
It is good to review who has already been selected for fiduciary role (such as Executor of your Will, Agent of your Power of Attorney, Guardian, or Trustee), whether they are willing and able to take on the responsibility, and if you would still prefer them to do it.
If someone you appointed previously has passed, and your documents do not already name a backup, that must be taken care of.
If you want to learn more about who makes a good candidate for Executor, read our article What Could Possibly Go Wrong? Choosing the Wrong Executor
3. Should I change who gets what?
It is important to review your list of beneficiaries not only to add and remove people from it, but to add extra protections for the people who need it.
In the case your situation has changed in terms of marriage and partnership, this is a key thing to think about. If you have gotten married for the first time, then it is natural you will want to add your new spouse to your pre-existing documents. However, if you were previously married, do keep in mind that after a divorce, your ex-spouse is not automatically removed from most existing documents. This includes your Will, Advance Directive, Power of Attorney, life insurance policy, as well as other things. So, even if you are not in another relationship, it is wise to revise these documents to remove them.
Read Estate Planning After Divorce to learn what documents you may need to reconsider.
Perhaps you are in a second marriage and each of you have your own children you wish to plan for. A trust is a great tool that is flexible and can be created to align with your goals.
Even if your new spouse has an estate plan, it is important to have your own in place as well. Read Yes, Married Couples Still Need Estate Plans to learn more.
One of the most common updates to an estate plan has to do with adding protections to a distribution. A subtle change can be one of realizing that a loved one is unable to manage their own financial affairs. Suppose you have a 40-year-old daughter who lives at home solely due to being unable to manage her own finances. It is important to plan to add extra protections to this kind of inheritance so that the money is spent wisely and is long-lasting.
Also, consider not only your beneficiaries, but their spouses. Even if the person who directly inherits from you is financially responsible, their spouse may not be. If they share assets, then your beneficiary is susceptible to their spouse’s influence.
Read What Could Possibly Go Wrong? Beneficiary Designations to learn more about what to avoid when choosing your beneficiaries.
If someone is disabled and receives government benefits, extra protection is necessary not only to protect them from manipulation but to preserve their benefits. A recipient of SSI can only have very limited assets directly in their name at any given time, and though you mean well, an outright gift may end up endangering their ability to receive government assistance.
Read Does Your Child’s Special Needs Trust Need A Tuneup? Probably. to learn about how Special Needs Trusts benefit from periodic revisions.
Our office is happy to work with you to update your estate planning documents, whether you have an estate plan you’d like to revise or this is your first time. Use the following link to schedule an appointment.