Once you create your estate plan, it is extremely important that you keep it updated and current. For most of us, our personal and financial situations will change over time, and our California estate planning must reflect these changes. Â These changes can include marriage or divorce, having children, injury or illness, buying or selling a business, and the death of a family member.
Any of these changes can have a significant impact on the planning we so carefully put in place. You must remember that updating your planning is intrinsic to the health of your plan. So often, we see carefully crafted plans fail because the creators never thought to update them.
Instead of letting this happen to you, let us share our four best practice tips for keeping your plan healthy and accurate!
1. Review your estate plan frequently.
It’s common for people to review their whole financial plan but not their estate plan. While this typically occurs annually, semi-annually, or even monthly, we don’t treat estate planning the same way. We want you to change your mindset on estate planning and review it as often as you would your savings account and your insurance policies. After all, if something happens, this plan will be automatically activated and you want it to be correct.
2. Update your estate plan when new people should be included.
If you have a child or adopt one, get married or choose to name other beneficiaries, it’s essential to update your estate plan to reflect these changes. You do not want someone you care about to be excluded because you failed to plan ahead.
In converse, if you choose to take people out of your plan after a significant life event, such as divorce, update your estate plan as soon as your decision is final. Therefore, if your life unexpectedly goes awry, the people you want to benefit from your estate will be the only ones listed.
3. Update your estate plan to reflect your current finances.
If your finances substantially change, such as an increase or decrease in the value of your estate or the acquisition of a significant asset, be sure to update your estate plan. Similarly, if you buy or sell a business, this should be reflected in your planning. Â Therefore, it can properly reflect what must be distributed once you pass.
4. Update your estate plan when your children reach 18.
When your children turn 18, they are considered legal adults. You also know their personalities, strengths, and weaknesses much better than you did when they were younger. Their needs most likely have changed, as well. Therefore, when you pass, you may choose to leave your estate to them differently than what your original design directs. Â
It is also a great time to include your newly minted adult children in the estate planning conversation so that they can begin planning as soon as possible. Since they are now adults, you will no longer be able to automatically legally assist your children with any medical or financial problems should something happen to them. Encourage your children to prepare their own power of attorney and advance health care directives naming you as their primary agent so you can continue being the caring parent you have always been; especially in an emergency or crisis.
In our firm, we know how important your estate planning is to you. Keeping your estate plan current is an essential part of planning for your future. When you pass away, your estate plan should properly reflect your current wishes and not the wishes you had 10 years ago. This is one of the reasons we have created our client care program. Through it, you can meet with us annually to address these changes and so many more, head on. By proactively planning, instead of reacting far after the time for action has passed, we can make sure your California estate plan is handled the way you want it to be.
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