Estate planning is not just a one-off event where you sit with attorneys and sign what feels like hundreds of pages of documents. To accurately reflect your wishes and current laws, updates and reviews should be done by an attorney every couple of years and with every significant life change. The attorneys at Jerimy Kirschner & Associates are experienced in preventing and navigating around the kinds of estate planning situations below.
Divorce
Divorce is hard on everyone, and there are many things to keep in mind in the process. But if it happens, it is vital to make sure that estate planning is updated along with everything else. Most married couples put each other into their wills and trusts, but that doesn’t mean the estate planning is automatically reversed in a divorce proceeding. The results when left unfixed can be emotionally charged and costly.
If someone forgets to take their ex-spouse off of their estate planning, the results can be completely different from what they wanted. An ex-spouse can still be a beneficiary, which would give them everything they were entitled to receive as if the divorce never happened. It can also make them the power of attorney, which would give an ex-spouse power over decision-making when the other is either incompetent or incapable of making the decisions themselves. It is easy to see how this misalignment of goals can make a once-simpler process complicated, especially if each ex-spouse has moved on and had other children they want to benefit from their will or trust.
Some states do have laws that revoke an ex-spouse from being treated as if they were still married. However, these laws vary from state to state and shouldn’t necessarily be relied on for a smooth transition.
Family Additions
New additions to the family are another thing to consider when updating estate planning. Whether a child is biological, adopted, or a stepchild, anyone that you would want included into your will or trust should be specifically mentioned. It will be important to consider who will be the guardian for each child.
New marriages are another addition that should be kept in mind. If you want your spouse to be able to have specific benefits and rights in the future, it would be best to get those taken care of as soon as possible.
Other Changes
Moving to a new state brings on many changes. The state itself will have its own laws and its own taxes, which will be better to know quickly rather than letting it be a surprise later. A few states have estate taxes, which will make a big difference on how much of your estate will actually get distributed to your beneficiaries if you are coming into or leaving one of those states.
Creating a business is something else to look out for when determining when to update estate planning. Business succession planning can help you set in stone the answers to questions like: who will run the business, who will own it, how it will be transferred and taxed.
A special needs trust is also important to consider if someone in your family has a disability. This kind of trust not only will make transitions easier, but can also provide the trustee a good way to care for the beneficiary without losing their government benefits.