It’s not uncommon for people to put off updating their estate plans. Life is often hectic, and updating your will or other documents usually isn’t a top priority. This is especially true for younger people who tend to think that there will be plenty of time ahead. There are, however, certain points in your life when you’ll want to put your estate plan at the top of your to-do list.
If You Have Children
Once you become a parent, choosing someone to act as their guardian if anything happens to you is extremely important. If you haven’t named someone to serve as guardian, your children could get caught up in a legal battle between relatives who petition the probate court for control. Obviously, if you are incapacitated or deceased, you won’t have any control over the outcome and your children could end up being raised by someone other than the person you wanted. Remember, the guardian will be the one making important decisions about your child’s life, including healthcare and education, so you’ll want to document your choice and update your wishes if your choice of guardian changes in the future.
Not only will you need to choose someone to raise your children, but you’ll also want to make sure that any assets you leave behind for them will be properly managed. If your estate plan doesn’t include a trust, this may be the time to create one. Setting up a trust allows you to leave instructions for how your children’s inheritance should be used and when they may have access to it. In the trust, you’ll be able to name someone to manage those assets, also known as a trustee. You don’t need to be wealthy to set up a trust. Assets such as insurance policy payouts and retirement savings can provide plenty of resources to protect!
If It’s Been a Long Time
If it’s been a while since you updated your estate planning documents, it’s time for a review. There may have been some major changes in the law that could affect how your estate will be distributed or taxed. Changes to federal laws related to estate taxes tend to make national news, so you may be aware of those. State laws, on the other hand, may slip under your radar. In fact, moving to a different state is also cause for a review due to the fact that state laws regarding estates will vary. A good rule of thumb is to have your estate planning attorney review your documents every three years to check for any needed changes.
If Your Assets Change
Any drastic changes in the monetary value of your assets are cause for an update to your estate plan. This holds true whether the change was an increase or a decrease. Reviewing your documents gives you the opportunity to make any changes or additions based on your new financial status. You will also need to update your plan if the form of your assets has changed. For example, if you once owned a vacation property that was included in your estate and you’ve since sold that property and put the money from the sale into an investment account, this change should be reflected in your estate plan.
If Your Choices Are No Longer Appropriate
When you first prepared an estate plan, you probably named someone as an executor or trustee based on your preferences and their abilities at the time. However, circumstances may have changed since then. Perhaps you chose a parent who was physically and mentally capable of being up to the task, but they aren’t any longer due to aging. Maybe you chose a sibling with whom you no longer have a strong relationship. Any changes involving those you’ve chosen for important roles may trigger the need for a review.
If You Have a Significant Amount in Retirement Assets
If you have money invested in IRAs or 401(k)s, those funds will be distributed upon death according to your beneficiary designations on those accounts. This also applies to life insurance policies and annuities. Even if you’ve updated your will and trust, those changes won’t apply to any accounts with beneficiary designations. Whenever you make plans to review your will and trust, make any appropriate changes to beneficiary designations as well.
When to update your estate plan can be boiled down to one simple idea: the time to review is when there’s been a change to your finances, the people in your life, or the law. Check with your estate planning lawyer for a recommended schedule. And, if you don’t already have an estate plan in place, there’s no time like the present. Just call our Tampa-area trust and estates law firm at (813) 438-8503 to get started.