Your estate is made up of all your money, property and assets – and it’s alive. Not literally, but think of it like a beautiful, low-maintenance house plant. Once purchased and placed in the perfect spot in your home, you just need to provide it a bit of care to keep it from wilting. Once you have a solid estate and wealth transfer plan in place, it needs to be updated when your life changes. Which specific instances call for an edit? Glad you asked.
New Additions to the Family
When you have a new baby, everything changes, including your estate plan. First, you need to name guardians in your will, or get a will in place if you haven’t already. And don’t forget to include your bundle of cuteness as a beneficiary (via an adult guardian). If you have more kids, including adoption and/or stepchildren, repeat as necessary. As your kids transform into full-fledged adults with spending power, it’s also important to periodically assess their place in your estate plans to make sure everything is equally distributed or split however you see fit. The main goal here is to prevent family rifts after you’re gone.
Marriage may have prompted you to put a plan in place to direct where your money should go in the event of your death. It likely involved creating or updating your will and other estate documents, as well as revisiting the beneficiary designations on existing health and insurance benefits. Splitting up means that it’s time to take another look at where all those things stand. Some people completely (and happily) erase exes from their will, but you may still choose (or be forced) to leave funds to your former spouse. Maybe it’s part of a court settlement, or for childcare, or because things ended amicably and you simply want to. Figure out what (if anything) you’d like to bequeath and make the change to prevent any future drama. You’ll need to update a handful of other things after a divorce: beneficiaries for life insurance and retirement accounts, emergency contacts, shared passwords, power of attorney, health care proxy.
Sadly, you may outlive some of the people named in your documents. If your health care proxy, power of attorney, or executor dies, you need to name new ones or elevate your alternates to primary position and name new alternates. If a beneficiary dies, reallocate inheritances to other living heirs or charities close to your heart. Similarly, if the appointed guardian of your children or special needs adult passes, it’s vital to designate a new one.
New Laws and Landscapes
This is when it’s prudent to call in the pros – your wealth advisor, accountant and attorney – because federal and state laws can change at any time and throw your current plan into chaos. If you move to another state, definitely read up on its codes and fill out any documents required for that state. For example, the advance directive from your old state might not hold up in the new one.
Money, Money, Money…MONEY!
A big salary increase or a sudden windfall from something like an inheritance or a great day at the track means a big bank account bump. Having assets you want to protect means a call to your wealth advisor and estate attorney. The same applies when you purchase pricey assets like homes or vehicles, or if you find yourself on the winning side of any lucrative business ventures. It’s also important to realize that a bigger estate might lead to more people fighting over it, so nip any possible disputes in the bud and look into creating a trust and setting up specific and ironclad asset allocation to your heirs in your will. Once it’s in writing you can rest easy knowing your wishes will be followed.
Content courtesy of Everplans. Used with permission. IRN-21-2187