If you have an estate plan, congratulations! According to some estimates, only about 40% of Americans have a will or estate plan. It is great news that you’ve taken concrete steps to protect your loved ones and ensure your assets go where you intend.
Unfortunately, there is some maintenance required to ensure your estate plan actually does what you want it to do. Luckily, that maintenance may simply be a meeting with your estate planning lawyer. You should do this every three to five years, just to ensure nothing crucial has changed. There could be changes in your financial or life circumstances or changes in the law that could affect your situation.
5 times you need to update your estate plan
You move to or buy real estate in another state. Each state has its own inheritance and probate laws. So, if you have an estate plan from another state and move to Florida, you will need to update your plan so that it works under Florida law.
You will not need an entirely new estate plan because the underlying information about your property and beneficiaries will be similar. However, you probably need to make new selections for your power of attorney, healthcare directive and executor/administrator, among other issues
Additionally, if you have or purchase real estate in another state, your plan will need to take that state’s laws into account. An experienced Florida estate planning attorney can help you incorporate Florida property into your out-of-state plan.
You welcome a new family member. The birth of a child or grandchild, a remarriage or a new set of in-laws may call for a revision of your plan. This is also true when there has been a divorce, a death in the family or if your designated charities lose your favor. Each of your beneficiaries should be specifically listed in order to avoid disinheritance or disputes.
Your estate grows or shrinks in value. Situations where this might occur include after a marriage or divorce or when you buy or sell a major asset such as real estate or a business. Whenever the size of your estate changes substantially, it can throw off the balance of the choices you made in your existing estate plan.
You need to change your executor or trustee. This could occur because you have moved and the designated person is in your old city or state. However, it also occurs when the designated person dies, when your estate changes, when a dispute arises or you find a more qualified person. Carefully consider your friends and relatives, along with professionals, to determine who is truly qualified, willing and able to perform the role.
You need help keeping up with your beneficiary designations. There are some assets that get transferred to beneficiaries immediately upon death instead of going through probate. These include retirement accounts, annuities and life insurance, for example. They are transferred to the beneficiary on file for the account — your will, trust or estate plan do not affect them.
Therefore, it is crucial to update these beneficiary forms regularly, whenever a life event occurs that could change your preferred beneficiary. In particular, a death, divorce, remarriage or new child should prompt you to update these beneficiary designations.
An experienced estate planning lawyer should be aware of any assets or benefits that will go directly to beneficiaries in this way. Having a full view of your overall estate can be crucial to your choices. Your lawyer can help you identify these assets and help you determine which ones may need beneficiary updates.
Whether you want to leave everything to your immediate family or dream of leaving a charitable legacy, an estate plan can ensure your assets go where you choose. Updating your estate plan can be an essential part of your strategy.