Life events will require legal planning, updates
Estate planning is the process of developing a strategy for the care and management of your assets if you become incapacitated or when you die. The objective of creating an estate plan is to eliminate fighting, minimize taxes and avoid court costs. Good planning names someone who will make medical and financial decisions for you if you cannot make decisions for yourself. You also need to consider how to leave your property and assets while considering your family’s circumstances and needs.
Because your family’s needs and circumstances change, your estate plan should change too. Your plan should be updated when certain life changes occur. Life changes are things like marriage, the birth or adoption of a new family member, divorce, the death of a loved one, a significant change in assets, or a move.
Marriage: It is not uncommon for estate planning to be the last item on the list when a couple is about to be married whether for the first time or not. On the contrary, marriage is an essential time to update an estate plan. You probably have already thought about updating emergency contacts and adding your spouse to existing health and insurance policies. There is another important reason to update an estate plan upon marriage. In the event of death, your money and assets may not automatically go to your spouse, especially if you have children from a prior marriage, a prenuptial agreement, or if your assets are jointly owned with someone else (like a sibling, parent, or other family members). An estate plan review can ensure you and your new spouse can rest easy.
Birth or adoption of children or grandchildren: When a new baby arrives, it seems like everything changes - and so should your estate plan. For example, your trust may not “automatically” include your new child, depending on how it is written. It is always a good idea to check and add the new child as a beneficiary. As the children (or grandchildren) grow in age, your estate plan should adjust to ensure assets are distributed in a way that you deem proper. What seems like a good idea when your son or granddaughter is a four-year-old may no longer look like a good idea once their personality has developed and you know them as a 25-year-old college graduate, for example.
Divorce: Some state and federal laws may remove a former spouse from an inheritance after the couple splits. However, this is not always the case, and it certainly should not be relied on as the foundation of your plan. After a divorce, you should immediately update beneficiary designations for all insurance policies and retirement accounts, any powers of attorney, and any existing health care proxy and HIPAA authorizations. It is also a good time to revamp your will and trust to make sure it does what you want (like leave out your former spouse).
The death of a loved one: Sometimes those who are named in your estate plan pass away. If an appointed guardian of your children dies, it is imperative to designate a new person. Likewise, if your chosen executor, health care proxy or designated power of attorney dies, new ones should be named right away.
A significant change in assets: Whether it is a sudden salary increase, inheritance, or the purchase of a large asset, these scenarios should prompt an adjustment to an existing estate plan. The bigger the estate, the more likely there will be issues over the disposition of the assets after you are gone. For this reason, it is best to see what changes, if any, are needed after a significant increase (or decrease) in your assets.
A move to a new state or country: For most individuals, it is a good idea to obtain a new set of estate planning documents that clearly meet the new state’s legal requirements. Estate planning for Americans living abroad or those who have assets located in numerous countries is even more complicated and requires professional assistance. It is always a good idea to learn what you need to do to completely protect yourself and your family when you move to a new state or country. We are here to help you get fully settled in and build a plan to protect you and your family.
Do you have all your bases covered? If not, we’re always here to help! There are many options available to you and we are here to walk you through the solution that is best for you. We’d love to learn more about your needs and eliminate a big source of uncertainty for you and your family. To learn more about these concepts, join us at an upcoming estate planning seminar.
Attorney Adam Hansen hosts free monthly seminars about wills, trusts and long-term care. The next seminars are 10:30 a.m. today at the Main Library and 10:30 a.m. Saturday at the Foothills Library. RSVP by calling (928) 783-4575 or visit YumaEstatePlanning.com.