You may have thought that creating a Will or Trust is a one and done experience. You check that box and then your family and assets are protected forever after. Many lawyers out there work this way, so it’s not surprising that many people think this. After all, you worked with a lawyer, they drafted documents, you brought them home in a fancy binder or notebook, then put that binder on a shelf or in a drawer, and then you never hear from that lawyer again. Estate plan, done. But, this is not the case, and thinking of it that way could leave your family with a mess when something happens to you.
In reality, life events can drastically affect your estate plan and even cause your plan not to work in the way you intended. To make sure your plan remains up to date throughout your life, we recommend reviewing your plan ideally once a year, but at a minimum, every three years. I believe this and stand behind it. That’s why, if you work with me, I will reach out to you every year and check in to see if your situation has changed.
If you haven’t worked with me, and any of these 10 life events happened since your last plan was put in place, you’ll want to have your plan professionally reviewed right away. Today, we’ll take a look at the first of these 10 life events and how they can affect your estate plan and what changes may be required.
01 | Your Assets or Liabilities Changed
Life is full of changes, and your financial situation is unlikely to stay the same over time. Changes in your assets, such as acquiring a new home or other assets, selling property, or incurring debt should prompt a review of your estate plan. You may need to update asset distribution, beneficiary designations, and financial provisions to reflect these changes accurately and ensure that the people you love receive what you intend when you die. Most importantly, you need to update your asset inventory every time your assets change, and if you do not have an asset inventory, you need to call us and update your plan to ensure you’ve got an inventory included. The biggest risk to your family in the event of your incapacity or death is that they do not know what you have, where it is or how to find it. We solve this by creating and updating your asset inventory, regularly.
02 | You Bought, Sold, or Started a Business
Owning a business adds another layer of complexity to your estate plan. If you’ve recently bought or sold a business, it’s essential to update your plan to reflect what you want to happen to your business when you die, ensure a smooth transfer of ownership (if desired), and create a plan to protect your business assets for yourself and your loved one’s future.
The financial and personal value of your business can be a significant gift to your loved ones both today and for years to come – if you know how to incorporate it into your estate plan in the right way.
03 | You Gave Birth or Adopted a Child
Welcoming a new child into your family is an incredibly joyful moment. As a parent, it’s essential to update your estate plan to include provisions for your child’s well-being and financial future. This includes naming Guardians for minor children, creating a plan for their protection, and ensuring their financial security through Trusts or other means.
It’s also important to document your wishes for your child’s education, religion, and values in your plan so that their legal Guardians will know how you would want your child raised if something happened to you.
04 | Your Minor Child Reached the Age of Majority (or Will Soon)
As your children grow up and reach the age of majority, it’s time to review how they will receive their inheritance, make sure someone can legally make healthcare decisions for them, and manage their money in the event they become incapacitated. Depending on their level of maturity, you may want to consider if they are ready to handle assets on their own and if so, what amount.
An even better idea is to provide lifelong protection of your child’s inheritance through the use of a Lifetime Asset Protection Trust. By using this estate planning tool, your child’s inheritance can be used to support your child’s future while safeguarding its use and protecting it from any potential future lawsuits or divorces your child may face later in life.
This ensures that your children are financially secure as they head into adulthood while also supporting your children with financial responsibility.
05 | A Loved One Dies
The loss of a family member is emotionally devastating, and it can significantly affect your estate plan. If a deceased loved one was a recipient of assets under your Will, Trust, or financial accounts, it’s crucial to update these documents to make sure your assets will be distributed to the right people.
Additionally, if the deceased individual was designated as a Trustee or Executor of your estate or a Guardian of your minor children, you will need to appoint new individuals to fill these roles.
Planning for Life’s Changes
Your estate plan is the foundation that protects your family and your finances today and in the future. But estate planning is not a set-it-and-forget-it task; rather, your estate plan should change and evolve with the changes in your life.
If you work with us, we’ll be here to guide you through life’s changes and keep your estate plan up-to-date and effective, so you can have the peace of mind of knowing that your plan will work exactly how you want it to when your loved ones need it most.
If you’ve recently experienced a significant life event or it’s been a while since your last estate plan review, now is the time to review your plan. If you haven’t created an estate plan yet, it’s better to plan early than to have no plan at all.
To get started, schedule a free 15-minute consultation to learn more about my planning session process where we’ll discuss your family dynamics and goals, address any changes in your life, and create a comprehensive estate plan that brings you peace of mind.
Plus, don’t forget to return next week when I’ll be discussing five more life events that signal it’s time to review your plan.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. You should seek legal advice specific to your needs from a lawyer you trust before making any changes to your estate plan.