
The one thing that we all know is that life is constantly changing. Before the pandemic, many of us were already sufficiently challenged keeping up with the changes in our lives under normal circumstances. It is mind-boggling to me when I think of all the changes that have resulted from Covid-19. They say that change accelerates under pressure. If you take that as true, it is no surprise what impact Covid-19 had on the very fabric of our world.
I, for one, am fascinated to see how broad, deep, and long-ranging the changes brought about by Covid will be. Whether it be travel, health care, technology, media, advertising, or hospitality, this collective experience has definitely been a reset for companies, employees, and society.
One of the things that I see frequently is how few people understand what impact life change has on their estate plan. We all know that our families change, our loved ones change, our assets change, and our laws change. Unfortunately, people quickly forget that estate planning is an ongoing process. Your estate plan should be reviewed by a qualified estate planning attorney every few years to ensure that the goals you set in making your plan are still valid and that your plan will work for your loved ones when needed.
The biggest problems I see with existing estate plans are those DIY plans done online by filling out a form or checking boxes. Those DIY plans consistently fail. The problem is that no one knows they fail until it is too late. The second most prevalent problem I see is people who think they have a trust, but it was never properly funded. It is heartbreaking to tell a family that their loved ones tried to do the right thing but are no assets in the trust. So off to probate court their loved ones go.
So what other things should you be on the lookout for? Here is my list of life changes which signal a need to review or change your estate plan.
1. Births and adoptions. Many estate plans name a guardian in a will but fail to provide for what happens if you do not die. Your estate plan should provide for the care and custody of your child in the event of your death or incapacity, both long and short-term.
Also, realize that when you designate a child as a beneficiary of your life insurance, retirement, or other accounts, without a trust, those funds will be administered by a probate court until your child turns 18. And then your child will be able to take all the money and do whatever they want with it, with absolutely no guidance or safety net. Make sure that your estate plan protects your beneficiary into the future.
2. Divorce. When you know you will be getting a divorce, it is essential that you update your estate plan. If you don’t, your ex-spouse may receive your assets if you die. Even more important is to update your health care power of attorney so that your estranged or ex-spouse is not making life and death medical decisions for you if you cannot.
3. Deaths. The passing of a loved one should prompt a review of your plan sooner rather than later. You may need to name new beneficiaries, find a new person to hold Power of Attorney, update your health care directive, or identify new guardians for your children.
4. Sickness. If you are in the midst of an illness, you may want to revisit whom you have chosen to make medical decisions for you, if you cannot, and how you want those decisions made. Not only is your choice of health care agent important, providing your loved ones with your choices on your health care decisions will save a lot of hassle and heartache.
5. Marriage. When you get married, update your estate plan to reflect your new legal status. Updating your will or trust, making changes at your place of employment, and determining how your financial and medical decisions will be made are all critical steps to take after marriage.
6. Moving. When you move to a new state, have a lawyer review your estate plan to ensure your documents will still operate as desired. Some documents may need to be revised, and you will want to ensure any new real estate you acquire in your move is accounted for and properly transferred into your plan.
7. New Assets Acquired. More money means more problems, but only if you don’t plan well. Your estate plan only works if your assets are owned properly. Revisit your estate plan each time you change investment accounts, inherit any assets, acquire new property or other investments, or start or sell a business. Most plans fail because they do not consider all of the assets owned by the person who died.
At Cris Carter Law, our goal is to help families like yours plan to protect yourself and your family through thoughtful estate planning. Schedule a time for us to sit down and talk through a Family Wealth Planning Session, where we can identify the best strategies for you and your family.