Stay Prepared: Updating Your Estate Plan for 2024 and Beyond
Estate planning is often perceived as a one-time task—something you set up, file away, and forget about until it’s needed. However, this approach can lead to significant issues down the road. Life is constantly evolving, and with it, our priorities, relationships, and financial situations change. Therefore, it’s crucial to regularly review and update your estate plan to ensure it aligns with your current life circumstances. Here are some key life events that should trigger a review and update of your estate plan.
Marriage
Marriage is a significant milestone that necessitates revisiting your estate plan. When you marry, your legal and financial circumstances change. You’ll want to ensure that your spouse is included in your estate plan, which may involve updating your will, designating your spouse as a beneficiary on life insurance policies and retirement accounts, and possibly creating joint accounts.
Moreover, marriage might lead you to reconsider who you have named as your executor, power of attorney, and healthcare proxy. These roles are crucial, and you’ll want to appoint someone you trust implicitly, which often is your spouse.
Divorce
Just as marriage requires updating your estate plan, so does divorce. After a divorce, it’s essential to revise your will, trusts, and beneficiary designations to remove your ex-spouse if that’s your wish. Failing to do so could result in your ex-spouse inheriting your assets or making medical and financial decisions on your behalf.
In addition to changing beneficiary designations, you may need to reassess your power of attorney and healthcare proxy assignments. You’ll likely want to appoint new individuals to these roles to ensure your wishes are carried out by someone you trust post-divorce.
Birth or Adoption of a Child
The arrival of a new child is a joyous occasion that significantly impacts your estate planning needs. You’ll want to update your will to name a guardian for your child in the event of your untimely death. This ensures that your child will be cared for by someone you trust.
Additionally, consider setting up a trust for your child’s benefit. This can help manage and protect assets until your child reaches adulthood. You’ll also need to update beneficiary designations on life insurance policies and retirement accounts to include your new child.
Significant Financial Changes
Major financial changes, such as receiving an inheritance, selling a business, or experiencing a substantial increase or decrease in your net worth, should prompt an estate plan review. These changes can affect tax considerations and the distribution of your assets.
If you come into a significant amount of money, you might want to explore setting up trusts or other vehicles to manage the wealth efficiently and minimize tax implications. Conversely, if you experience a financial setback, you may need to adjust your estate plan to reflect the new reality and ensure your loved ones are still provided for.
Relocation to a Different State or Country
Laws governing estate planning vary significantly from state to state and even more so from country to country. If you move to a new state or country, it’s essential to review and possibly revise your estate plan to ensure it complies with local laws.
For instance, some states have different rules about probate, spousal inheritance rights, and estate taxes. Working with an attorney familiar with the laws of your new location can help ensure your estate plan remains valid and effective.
Death of a Beneficiary or Fiduciary
The death of someone named in your estate plan, whether a beneficiary or someone assigned a fiduciary role like an executor or trustee, requires immediate updating. You’ll need to name new individuals to these roles to ensure your estate plan functions as intended.
This can also be an opportune moment to reconsider who you’ve appointed to these critical positions. Relationships and circumstances change over time, and it’s important to ensure that those you’ve chosen are still the best fit for carrying out your wishes.
Changes in Tax Laws
Tax laws are subject to change, and these changes can significantly impact your estate planning. For example, alterations in estate tax exemptions, gift tax rules, or income tax rates on inherited assets can all necessitate revisions to your plan.
Staying informed about changes in tax laws and working with an estate planning attorney can help you adapt your plan accordingly, ensuring your assets are protected and distributed in the most tax-efficient manner.
Regular Review
Beyond specific life events, it’s a good practice to review your estate plan regularly, such as every three to five years. This helps ensure your plan remains aligned with your current wishes and circumstances.
In conclusion, an estate plan is not a static document. Life changes, and so should your estate plan. Regular updates ensure that your plan reflects your current situation, protects your loved ones, and fulfills your wishes. By staying proactive and revisiting your estate plan in response to life’s milestones, you can ensure peace of mind for yourself and your family.
*RED ALERT* - LynnLeigh & Company does not provide legal advice. It is crucial to coordinate your beneficiary designations with your Trust and Estate Attorney to avoid unintended consequences.
LynnLeigh & Company - A Registered Investment Advisor This information is provided by LynnLeigh & Co. for general information and educational purposes based upon publicly available information from sources believed to be reliable – LynnLeigh & Co. advisors cannot assure the accuracy or completeness of these materials. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice. Past performance is not a guarantee of future returns.
