An Old Estate Plan May Be Harmful to Your Health
Antique jewelry, classic cars, valuable collectibles: Any vintage lover knows that sometimes, old is better than new. Not when it comes to your estate plan, though. The estate planning documents you created in the past won’t necessarily serve you well today.
Even proactive estate planners sometimes make the mistake of considering the process “done.” In reality, most people will need to adjust their estate plans intermittently. Shutting your will and other estate planning documents away in a drawer and forgetting about them could leave you unprepared in an emergency, or leave certain loved ones from inheriting your assets.
Estate Plans Have to Evolve
What if you’re in an accident tomorrow and doctors have to put you into a medically-induced coma? Would your estate plans reflect your current wishes and be practicable? Or would doctors have to make decisions on your behalf because the person you named as your health care proxy is now your ex-spouse, or is suffering from dementia?
Too often people think of estate planning as being about what happens when you die. But your estate plans also become relevant if you’re seriously ill or injured, so they have to be ready and practicable today, even if you’re relatively young and healthy. Review them frequently and update as needed.
When to Update Estate Plans
There’s no set schedule to follow when updating your estate plans. Your personal circumstances determine the timing. It’s generally advisable to review your estate plans whenever:
- Your family welcomes a new child. A new addition to the family may require making some additions to your estate plans. Parents should update their wills to reflect their wishes around things like guardianship and inheritance. Some parents will want to establish trusts for their new children, or amend existing trusts to add new children as beneficiaries. Grandparents and other relatives of a new child may also need to update their estate plans if they plan to leave any assets to the child. A new stepparent may also want to update their estate plans to add provisions for their stepkids.
- Your marital status changes. Any change in your status warrants a review of your plans, so this belongs on your to-do list if you’re getting married or divorced, or if your spouse has died. Getting married generally necessitates making significant changes to your estate plans. New spouses may want to coordinate their plans so their wills and other documents are in sync.
Someone who loses a spouse may need to update some designations (like their health care proxy and power of attorney) if their spouse used to fill these roles. They may also need to change beneficiary designations for life insurance policies and other accounts. Also, a newly divorced or widowed person may want to rethink how to divide up assets among other loved ones once they know their spouse won’t be inheriting.
- One of your appointees dies. One of the primary goals of estate planning is to identify the people you trust to make important decisions on your behalf if necessary. Someone with a basic set of estate plans may have named a health care proxy, financial power of attorney and one or more trustees, plus alternates for these important roles. Those plans need to be updated whenever one of the people named within them dies or becomes incapacitated. You’ll want to make new choices quickly in case you’re incapacitated yourself, and need a trusted person to speak for you.
- Your financial picture changes dramatically. Minor fluctuations in your net worth don’t necessarily warrant changing your estate plans. Significant changes might, though. For example, if you’ve started a successful side business since the last time you updated your estate plans, your new assets could affect your estate tax planning strategy.
- You acquire or get rid of assets. Have you bought a new boat or sold a vacation rental since the last time you updated your estate plans? Make sure your estate plans account for all your current major assets.
- You can’t remember the last time you looked at them. Maybe your life has been pretty stable for a long time, and you haven’t needed to pull out your estate planning documents in years. If it’s been long enough since you created those plans that you can’t recall their details, it’s time to review them. Read over your will and other documents to make sure they’re still reflective of your wishes.
Estate planning doesn’t have to be complicated. Updating your existing plans can be quick and painless, and it’s a relief to know that it’s taken care of. Ladimer Law is here to help you establish your plan and update it as necessary. Contact Ladimer Law for help.