So, you finally got your estate planning done! A great sense of security has probably washed over you since everything is in order, but did you know that estate planning isn’t “set-it-and-forget-it” like mom’s slow cooked pot roast? As we all know, life happens. However, some of the most common life events can have a dramatic effect on your estate plan. Let’s take a look at some common life changes and the impact they may have on your already established estate plan.
Birth or Adoption of a Child or Grandchild
It is fairly common for new parents to have an estate put together after the birth of their first child. A few years down the road, a new child has joined the family! What an exciting time to be a parent! However, depending on what provisions are in place, the second child might have difficulty getting their intended share if the estate plan was not updated after their birth. This might lead to stress between the children as they try to execute your wishes, and in some cases the probate court may need to become involved. This can be the case for grandparents as well. Many grandparents love spending time with and supporting their grandchildren in any way they can. Depending on how long it has been since you have updated your estate plan (or if you don’t have one in place at all) a grandchild who has been left out of the estate plan, even accidentally, may miss out on opportunities the grandparents intended for their grandchildren.
Death of a Family Member
There are many people that are involved in a will or a trust. There are those who are creating the estate plan (will maker or trust maker, respectively), those who receive a benefit from the estate planning (beneficiaries), and those who are in charge of carrying out the document’s instructions (executor, or trustee). Aside from the will maker or trust maker, the death of any of these individuals can greatly impact the estate plan. A beneficiary’s death may mean that the others receive a larger sum of the share or that the deceased beneficiary’s descendants receive that share. It is crucial that you (as the will maker or trust maker) select backups in case the first person you named passes away (even if it is before you). If you named no alternate, or not enough alternates, then depending on your estate plan’s terms, your loved ones may be able to pick the successor or a judge may have consider state law to determine whom to appoint.
Purchasing a New Home
Purchasing a new home or investment property can dramatically impact a trust-based estate plan. Usually when you create a trust, you prepare a deed transferring your home to it, making it easy to ensure your home is transferred according to your wishes after your passing. If you had us prepare your estate planning documents, we transferred your home into your trust. Now it’s a few years later, and you’ve found a nice beach home in Florida! Remember, you need to fund your new real estate into your trust to avoid probate. Once the transaction has closed, you need to contact an attorney to transfer the new property into the trust! Here at McClenaghan Law Group, we make sure to do all of the hard work for you so all you have to do is give us the address and sign your deed. Contact our office to set up a consultation to discuss your assets and whether they’ve all been properly aligned with your estate plan.
Marriage and Divorce
Marriage is an exciting and sometimes complicated process. You may have your own money and property and, over the coming years, you will probably accumulate money and property jointly with your spouse. Having written agreements with your partner regarding which property is separate and which is joint can be important for couples with major assets prior to marriage. Outlining your wishes for what you want to leave to your spouse and deciding what decision-making authority you want your spouse to have in the event you are unable to make your own decisions are all crucial elements that an estate plan should cover. If you fail to update your estate plan after marriage, the court may have to be involved for your spouse to be able to make decisions for you or to receive the distributions you intended for them to have.
It is natural for married couples to name each other as their trusted decision maker in their estate plans. It is also probable that you named your spouse as a beneficiary of some of your money and property. If you and your spouse decide to separate, your wishes for them to be a beneficiary or decision maker under your estate plan will likely change. State laws controls the effect of a divorce on a person’s estate planning and each state is different. To avoid complicated matters, it is best to update your estate planning documents so there is no question about your intent.
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. We applaud you for taking the crucial steps of having a intentional estate plan prepared instead of relying on the state’s default rules. If you or a loved one have experienced any of the above events since you last updated your estate plan, now is the time to call us to schedule a review of your documents. Do not wait until it is too late, McClenaghan Law Group is dedicated to making sure you can trust your Trust, call our office or contact firstname.lastname@example.org to set up an appointment today!