Do I Need To Update My Plan?

You have crafted your estate plan years ago.  Congratulations!  But life does not stand still, and since creating your plan your circumstances have changed.  Most changed circumstances will necessitate a review and possible amendments to your plan to ensure that your plan speaks to your final wishes and legacy for your loved ones.  

Estate Planning Attorney

Review your assets against your plan design, as well as your recipient’s current life circumstances, at least once a year to make sure everything is in sync.  Your estate planning attorney can help you determine when changes are needed and what the best way in which to implement such changes. 

Below you will find a partial list of changes in life’s circumstances which may require a change to your estate plan.

1. Additional Life Insurance Needs

You purchase life insurance to make sure your family is protected in the event of your death. You want to know your kids will be cared for and that your family, for instance, can continue to live in your home. 

Changes in your family, business, or even wealth, might make you decide to purchase additional life insurance for your family. This would ultimately add more wealth to your estate, making it a good time to revisit your estate plan. 

2. Beneficiary Designations

One important aspect of your estate plan is the designation of beneficiaries who are to receive assets under your plan. You need to designate beneficiaries under your will, your trust, or any life insurance and other investments. If you bought or sold, or if there have been any significant changes to your assets, or to your currently named beneficiaries, it would be wise for you to review your estate plan in light of such changes.

3. Changes In Pension or Profit-Sharing Plan

You may have access to a pension or profit-sharing plan. The assets associated with these benefits should be part of your estate plan. 

You may change jobs, causing a change in your access to those plans. In addition, changes by your employer in plan design or changes in federal laws may affect the way the plans operate.

You want to stay abreast of these types of events and how such events may impact you or your beneficiaries interests under such a plan. You also want to make sure your estate plan has up-to-date information regarding those accounts as part of the plan.

4. IRA Adjustments

IRA accounts are often part of a retirement plan for many. If you open a new IRA account you should revisit your estate plan. 

Additionally, if you make any changes to your beneficiary designation on an existing IRA, you may wish to address your estate plan.

5. Real Estate Purchases

Have you bought a vacation property or investment property? 

Any new real estate (especially a property subject to a mortgage) requires you to review your plan.  Real property poses special problems which can lead to family disputes, liability and income tax problems.  Protection of minors requires special drafting. 

6. Changes In Financial Wealth 

As you age, you may experience a change in financial wealth. This may come from selling property or a business that, in turn, realizes a financial gain. You might inherit significant property. Some people even find aging parents starting to gift money to their heirs. 

Any significant changes to your financial wealth need to be reviewed in light of your current estate plan. If you add something that changes your wealth, you want it noted and accounted for in your estate. Likewise, if you have a decrease in wealth, you want that accounted for, too. 

  1. Children or Grandchildren

Adding children or grandchildren to the family is a true blessing. One important part of estate planning is designating guardians and caretakers for your children. You want to ensure your children are cared for when you are incapacitated or no longer here. In addition, your children or other beneficiaries may need protection from creditors.  If you, or your children, have new children, you want to make sure they are named and protected in your estate plan. 

Your plan might also require a change if your children have gone to college or moved out of, or into your home, or you want to include your grandchildren as beneficiaries. Make sure your loved ones whom you wish to receive your hard-earned assets are named in your plan.

8.  Change In Marriage Status

Life can bring about many changes to the status of relationships and marriages over time. Sometimes you want these changes and other times they come as a shock. Keep your estate plan up to date if any of the following changes have occurred:

  • You or your child have been divorced
  • You or your child have married or remarried
  • You or your child is in an unwise marriage and has separated
  • You or your child are contemplating divorce or are in the midst of a divorce  

Often this means you will want to change how your assets are distributed in the event of your death. It might require changing beneficiaries on investment plans.

If you are in a long-term relationship, but not married, you can also include this partner in your estate planning too. If the status of your long-term relationship changes, this would also require a change to your estate.

9. Retirement

The onset of retirement often changes your financial picture. It might change your insurance needs or how you are handling or allocating your investments.

This is the kind of big life event that should include a look at your estate plan to make sure it’s up to date.

10. Moving 

If your changed circumstances included moving to another state, you want to revisit your estate plan to make sure it complies with the laws of the state in which you now reside. In addition to laws regarding property and distribution of assets, the laws of your new domicile may affect your tax planning.  

11. Illness

Often an illness can come as a surprise. If your physical or mental condition suddenly changes, or you are facing a terminal illness, you may want to take a look at your estate plan. 

The onset of the Covid-19 pandemic has left many families with unexpected illness and death. Many are now finding that their affairs are not in order and their plans, if not updated, will fail to distribute their assets to their loved ones in accordance with their wishes. 

When you update your plan, make sure all of your medical directives are spelled out, and your wishes are clear with respect to matters related to your health care.

12. Death or Disability

Another time to revisit the estate plan is when a family member or beneficiary has died or is facing a long-term disability. These events may require changes in beneficiary designations, or a shift in beneficial interests under your plan. It also might mean a clear care plan for the disabled family member is indicated. 

Your estate planning attorney will better be able to address your assets and implement those plans if you have them up to date in your estate. 

13. New Financial Responsibilities

You might find yourself in a position of taking on the care of a new family member. One example might include a grandparent who finds themselves taking on the financial and care responsibilities of a grandchild. 

Whenever a change occurs in which you have agreed to assume financial responsibility for welfare and support of another, you may wish to review your estate plan.

  1. S Stock Corporate Stock

Stock acquisition or disposition will change the status of your financial situation. It can have real tax implications for you as an individual and for your estate as a whole. 

If you acquire S stock, it needs to be addressed in your plan.

  1. Changes in Status of a Family Business

Any change in the status of a family business should be in an estate plan. You may have spent your life building your business. Maybe you have created your estate plan early on in the life of your business. Or maybe your business has grown in a way that requires more detail in your estate plan. 

Perhaps as you enter retirement you opt to sell your business. Trusts routinely include interests in small businesses.  The prudent estate plan will almost always provide explicit directions to the Trustee, as well as grant the Trustee adequate powers to manage, sell and distribute the business interest.

Get Help Reviewing Your Estate Plan

Having a solid and well-thought-out estate plan protects your heirs and your assets. While it’s smart to have an estate plan in place, the occurrence of life’s many events which often will necessitate a comprehensive review of your estate plan over time. 

If you need help with estate planning or making adjustments to your estate plan, we’re here for you.  We concentrate our practice in assisting individuals, families and business owners create and maintain estate plans to hold, protect and transfer assets to their loved ones. Contact our office today to arrange a consultation about the status of your estate plan.