Some of the most common life events can have a dramatic effect on your estate plan. If you think your estate plan is like a slow cooker and you can set it and forget it, you and your loved ones may be in for a stomach-turning surprise when it is time to put your plan into action. Let us take a look at some common life changes and the impact they may have on your already established estate plan.
Birth of a Child. It is common for parents to have their estate plan prepared after the birth of their first child. However, depending on what provisions are in the first iteration, a second child might have difficulty getting their share without court involvement if the clients do not revise their plan after the birth of a subsequent child.
Birth of a Grandchild. Many grandparents love spending time with and supporting their grandchildren in any way they can. However, depending on the family structure, a grandchild who has been left out of an estate plan may have no recourse and may miss out on the opportunities the grandparents may otherwise have intended their grandchildren to have.
Death of a Family Member. A number of people are involved in creating a will or trust. There are those who are creating the estate planning documents, those who receive a benefit from the estate planning document, and those who are in charge of carrying out the document’s instructions. The death of any of these individuals can greatly impact the estate plan. Reviewing your estate plan to make sure that your wishes will still be carried out is important.
Purchasing a New Home. Purchasing a new home can dramatically impact a trust-based estate plan. Typically, for this type of plan to work as intended, either all accounts and property need to be owned by the trust or the trust needs to be named as the beneficiary. If you buy a new or second home, you need to remember to fund your new real estate into your trust to avoid conservatorship and/or probate.
Marriage. Marriage is an exciting and sometimes complicated process. You may have your own money and property, and, over the coming years, you will probably accumulate money and property jointly with your spouse. Keeping straight which property is separate and which is joint, outlining your wishes for what you want to leave to your spouse, and deciding what decision-making authority you want your spouse to have in the event you are unable to make your own decisions are all crucial elements that an estate plan should cover. If you do not update your estate plan after your marriage, a court may need to get involved.
Divorce. It is natural for married couples to name each other in their estate. It is also probable that you named your spouse as a beneficiary of some of your money and property. However, if you and your spouse divorce, chances are your wishes will change. State law varies as to the effect of a divorce on a person’s estate planning. To avoid complicating matters, it is best to update your documents so there is no question as to your intent.
We applaud you for having taken the crucial step of having an intentional estate plan prepared instead of relying on the state’s default rules. However, estate planning is not just a once-in-a-lifetime event. Your plan is a set of documents that can be impacted by many common life events. If you or your loved ones have experienced any of the above events recently (or since you last updated your estate plan), now is the time to call us to schedule a review of your documents.