An estate plan should provide peace of mind that your wishes will be carried out and your loves ones taken care of. For those of you who have created an estate plan, you know what I am talking about. However, shortly after you achieve this blissful state of being, you tuck your documents away in a safe place and continue living life. My dad always reminds me, “People plan – God laughs.” It is somehow empowering to give up control. However, as an estate planning attorney, it is my job to help people plan. With this in mind, your estate plan should be based on your current set of circumstances.
A basic estate plan is comprised of various legal forms, which commonly include a will, a revocable living trust (if necessary), power of attorney, advance health-care directive, funeral arrangements and other financial documents outlining how you wish your assets to be managed and distributed in the event of your incapacity and after your lifetime. As your family and assets evolve through the years, your estate plan should be revisited periodically to make sure it still accomplishes your goals.
A good rule of thumb is to review your documents with an estate planning attorney every 4-5 years because laws change from time to time, which may provide for new planning opportunities. If you have already created an estate plan with an attorney, although it is often expected and appreciated, an estate planning attorney is, generally, not responsible for contacting you in the event of a change in the law because you are no longer “legally” considered a client following the execution of your estate plan. For example, due to recent changes in the law, if you are married and have trusts created prior to 2013 with tax planning, you may benefit from reviewing and updating your documents with an estate planning attorney.
In addition to a periodic review of your plan due to changes in the law, a review of your existing plan should be done following any significant life event. The following events are the most common scenarios that may trigger a reevaluation of your estate plan:
Change in Assets or Priorities
A significant increase or decrease in the value of assets (i.e. win the lottery or inherit) or a change in the type of assets may change the effectiveness of your existing plan. Also, a change in your priorities should be reflected in your documents. For example, you may want to be more charitable and incorporate charitable giving into your plan.
Living in a New State
If you created your documents in a different state from where you current live, you should have an estate planning attorney in your new state review your documents. The laws that govern this area of the law vary from state to state.
Change in Legal Relationship
It is common to name your spouse as the beneficiary of all assets. If you divorce, you may want to update your documents, including the designated beneficiary provisions on all insurance policies, retirement accounts, TOD accounts, etc.
Birth/Adoption of Children or Grandchildren
You can name a legal guardian to care for your minor children. Also, as your children get older, another update might be in order to reflect their needs and your wishes.
You may need to replace a named agent, such as guardian/executor/trustee, if she is no longer able to serve due to death, disability, or health issues.
If you become the primary caretaker of an adult child or parent, you may want to provide for their care in the event they survive you.
An effective estate plan will provide you with peace of mind that your goals with be carried out and your loved ones taken care of. Life changes and with it, our plans and goals.
Also, I am required to state this is not legal advice and you should not rely on any of this information to determine what is in your best interest. Further installments of this column will address the more common questions and situations that I see as an estate planning attorney. All information will be based on hypothetical scenarios, however, not the actual circumstances of real clients.