Just as regular check-ups with a doctor ensure our physical health and dental visits maintain our smiles, an often-overlooked aspect of well-being is our estate plan's regular maintenance. Your estate plan needs regular maintenance, according to an article from The Street, which asks, “When Is It Time to Update Your Estate Plan?” An article from The Street poses a pivotal question, "When Is It Time to Update Your Estate Plan?"Far too often, estate plans gather dust for years, leaving provisions outdated and roles of key individuals obsolete. This neglect can have dire consequences, from unintended disinheritance to beloved pets being left uncared for. The remedy is simple: take action. Regular scans of your estate plan and timely updates are pivotal, safeguarding your wishes and protecting those you care about.
Failing to update an estate plan can lead to a beloved child being disinherited or an animal companion ending up in a shelter. This is an easy problem to solve. However, it requires taking action. Scanning your estate plan once a year won’t take long. However, when certain events occur, it’s time to bring all your estate planning documents to an estate planning attorney’s office.
Here are a 5 events when you may want to make changes:
Welcoming a new child into the family. Wills and trusts often contemplate future children. However, when the children arrive, you’ll need to update wills, trusts and beneficiary designations. Life insurance policies, investment accounts and retirement accounts allow you to name a beneficiary, and the proceeds from these accounts go directly to the beneficiaries, bypassing probate.
If no beneficiary is named or cannot be located, the asset usually goes back into the estate, meaning it goes through probate and there may be tax liabilities.
Charitable giving goals often change over time. An organization with great personal meaning in your twenties may be less important or may have closed. If you’ve become involved with a charitable mission and want to leave assets to the organization, you’ll want to create a charitable bequest in your will or trust. Those changes need to be reflected in your estate plan.
People’s ability to serve in fiduciary roles may have changed. If the people you assigned certain roles to—like trustees, executors, agents, or the guardian named for minor children—may no longer be suitable for the role. The person you selected to serve as a guardian for minor children may not be available or willing to manage adolescents. If your trustees are over 70, you may want to name an adult child to serve in this role.
Reviewing insurance policies needs to be done regularly. In some cases, the value of life insurance proceeds may be subject to estate tax. Proper planning should be able to avoid this by making certain the policy is not included in your taxable estate.
If you are considering taking out a new life insurance policy, revisit your existing plans with your estate planning attorney. It may make sense for you to create an insurance trust, which allows you to exempt certain assets from your taxable estate.
Are pets an important part of your life? If so, you may want to make plans for who should take care of your pet if you pass away. In many cases, a pet trust works to name a trustee to manage funds for the pet’s care and formally outlines how you want your pet to be cared for.
A well-crafted estate plan is not a static document; it's a reflection of your evolving life. Major life events like welcoming new children, shifting philanthropic passions, or changes in the capability of designated individuals to serve roles demand a proactive approach to estate planning. Regularly reviewing and updating your estate plan—whether every few years or following significant life milestones—ensures it aligns with your present circumstances and desires. In partnership with your estate planning attorney, these measures safeguard your legacy and ensure that your wishes are meticulously followed. Estate planning isn’t just a once-in-a-lifetime task; it’s a commitment to protecting what matters most. Book a call with Vick Law, P.C. to update your estate plan today.
Reference: The Street (Oct. 30, 2023) “When Is It Time to Update Your Estate Plan?”