As we all know, life happens. There is really nothing we can do about it. However, some of the most common life events can have a dramatic effect on your estate plan. If you think your estate plan is like a slow cooker and you can set it and forget it, you and your loved ones may be in for a stomach-turning surprise when it is time to put your plan into action.
Some common life changes that may impact your already established estate plan…
Birth of a Child
It is common for parents to have their estate plan prepared after the birth of their first child. However, depending on what provisions are in the first plan, without revision, a second child might have difficulty getting their share without court involvement.
Birth of a Grandchild
Many grandparents love spending time with and supporting their grandchildren in any way they can. However, depending on the family structure, a grandchild who has been left out of an estate plan may have no recourse and may miss out on opportunities.
Death of a Family Member
Several people are involved in creating a will or trust. For instance, some of these people include the creators of the estate planning documents, those who benefit from the estate planning document, and those who are in charge of carrying out the document’s instructions.
Aside from the will or trust maker, the death of any of these individuals can greatly impact the estate plan. Reviewing your estate plan to make sure that your wishes will still be carried out is important, even if your first-named beneficiary is no longer living.
Purchasing a New Home
Purchasing a new home is a huge life accomplishment but can dramatically impact a trust-based estate plan. Typically, for this type of plan to work as intended, either all accounts and property need to be owned by the trust or the trust needs to be named as the beneficiary. Usually, when you create the trust, you prepare a deed transferring the home to it. This makes it easy to ensure that the trust owns your home. However, if you decide years later to buy a new or second home, you need to remember to fund your new real estate into your trust to avoid probate.
If you do not transfer the property to your trust, then upon your death, it will go either to the surviving owner, or through probate if you owned it individually or as a tenant-in-common.
Marriage
Marriage is an exciting and sometimes complicated process. You may have your own money and property, and will probably accumulate money and property jointly with your spouse.
Crucial elements an estate plan should cover:
- Which property is separate and which property is joint
- What you want to leave to your spouse
- What decision making authority you want your spouse to have
If you do not update your estate plan after your marriage, a court may have to be involved for your spouse to be able to make decisions for you and receive what you want them to have.
Divorce
It is natural for married couples to name each other as trusted decision makers in their estate plans. It is also probable that you named your spouse as a beneficiary of some of your money and property. However, if you and your spouse divorce, chances are your wishes will change.
State law varies as to the effect of a divorce on a person’s estate planning. To avoid complicating matters, it is best to update your documents so there is no question as to your intent. Because of the varying treatment under the law, it is important that you meet with an estate planning attorney after your divorce has been finalized to replace your trusted decision makers and name new beneficiaries. The last thing you want is to give your ex-spouse a reason to be involved in your estate plan, even if they will receive nothing.
Do not wait until it is too late!
We applaud you for having taken the crucial step of having an intentional estate plan prepared instead of relying on the state’s default rules. However, estate planning is not just a once in a lifetime event. Your plan is a set of living, breathing documents that can be impacted by many common life events. Take action before the outcome leads to a disaster for those you care about.
If you or your loved ones have experienced any of the above life events recently (or since the last updated estate plan) call us today at (949) 333-3702 or click the link below to schedule an estate planning review.