Life is punctuated with milestones and unexpected shifts. It is important to remember that each one can impact your estate plan. Navigating them requires forethought and preparation. Although plans must be updated, the absence of one can be the precursor to family strife and the unintended distribution of your assets. When you pass away without forming an estate plan, state laws dictate who receives your assets, which will happen regardless of what your wishes would have been. Estate planning is not an exclusive tool used by affluent people; it is a universal necessity.
How Change Impacts Estate Plans
Life is dynamic, and it falls within reason that it will change. People are forced to deal with marriage, divorce, childbirth, or losing a loved one. These are all pivotal events in a person’s life. Each one requires you to reassess and modify your estate plan. Adapting to the changes in your life is crucial to averting potential disagreements (and litigation). Additionally, you will have peace of mind knowing that you have a detailed plan on how your assets will be distributed to your beneficiaries that mirrors the current state of your life. Moreover, the laws related to estate planning are evolving and are a significant component of this equation. Changes in tax laws regarding estate planning demand a periodic review of your existing estate plan to ensure compliance with current legislation.
Saving & Making Plans for Your Assets
When you acquire anything of value, such as money or property, these must be added to your estate plan. For example, creating a trust is not an end in and of itself. People may overlook the need to put their newly acquired assets into the trust, known as funding. This needs to coincide with title changes as well. It’s essential to do this, especially if you have complicated assets like a business. Modifying and checking your estate plan avoids mistakes and ensures the right people get what you intend them to. Reviewing and updating these plans every few years or when significant life changes happen, such as getting remarried or even relocating, is good.
If you don’t make an estate plan, intestate laws dictate who will receive your assets, and these laws may completely contradict what you would have wanted.
Look at the Following Example
Updating an estate plan is vital to ensure the fair and intended distribution of assets in scenarios like remarriage and having more children. Here’s why someone might need to update their estate plan in this situation:
Ensuring Fairness to All Your Children
- Equal Treatment: It’s crucial to ensure that all children, from the first marriage and any subsequent marriages, are treated fairly (if that’s the intent) in the estate plan.
- Specific Provisions: There might be specific assets that the person wants particular children to inherit.
Supporting the New Spouse
- Providing Support: The estate plan must be updated to ensure the new spouse is provided for, per the individual’s wishes.
- Asset Distribution: Deciding how assets will be divided among the new spouse and all children is vital to prevent potential legal conflicts after passing.
- Guardianship of Minor Children: If the new marriage results in more children, decisions about who will care for them (guardianship) must be outlined in case both parents pass away.
- Financial Management: Ensuring arrangements for managing the children’s inheritance until they come of age is also crucial.
Addressing Different Needs
- Educational Needs: Allocating resources for educating younger children might be necessary.
- Special Needs: If children have special needs, special trusts might need to be established to ensure continuous care.
Avoiding Future Conflicts
- Clear Delineation: Clearly outlining asset distribution minimizes the risk of potential disputes among family members.
- Stating Wishes Clearly: It helps prevent misunderstandings about what was intended for each family member.
Adhering to Legal and Tax Implications
- Tax Planning: Ensuring the estate plan is tax-efficient and adheres to the legal frameworks of inheritance and estate tax.
- Legal Compliance: Keeping the plan updated and compliant with any changes in the estate laws.
Adjusting to Changing Relationships
- Altered Relationships: Relationships can evolve, and an updated estate plan can reflect current emotional ties and responsibilities.
- New Dependents: New family members or dependents might need to be considered and included in the plan.
Modifying or Changing Your Plan
It’s essential to talk to a knowledgeable lawyer to make or change your plan to reflect your wishes. Your lawyer will help you list all your valuable things, decide who gets what, choose someone to carry out your wishes, and, if needed, select someone to look after your minor children and make health decisions for you if you can’t. After discussing this, your lawyer drafts the necessary documents. A proper plan protects your wishes and reflects your values and care for your loved ones. Don’t delay making these plans; talk openly with your family to avoid problems.
Ensure your wishes are followed and the right people receive your assets. Whether you need a new plan or change an old one, now is the time to do it. Beckemeier LeMoine can help you with all your unique needs with great attention to detail. Schedule a time to talk with us and start protecting your legacy.