The first serious approach to estate planning usually takes place when people decide to start a family. And for the average person, this is also about the time when estate planning stalls or enters an indefinite hold. Once they’ve created a plan, people tend to place it on a shelf as they attend to their busy lives, and as major life changes take place over the years, that shelved plan doesn’t always get the attention and updates it needs. This can be a major mistake, since if you fall into this pattern, you can place your money and assets into probate or you can accidentally entrust them to the wrong hands. In order to make sure your wishes are followed in the event of your death or an incapacitating illness, remember to update your estate plan when you encounter any of these nine life events.
Life Events and Major Decisions
Here are the biggest common life events that warrant a second look at your estate plan:
- Marriage: When you decide to get married, you’ll need to update your beneficiary information, your life insurance policy, and your emergency contact information.
You may also want to prepare a will and a living will. As the years go by after your wedding, you can also consider a revocable trust. Talk to your spouse about how you’d like your estate to be managed.
- Divorce: Couples rarely plan for divorce, but marriages sometimes end, and when they do, the legal complexities can be surprising and overwhelming. Estate planning can be overshadowed as couples work out these complexities, and that can create a different set of problems down the road. Change your estate plan as soon as your divorce proceedings have been finalized, and you’ll make sure your home, life insurance and other assets don’t end up in the hands of your ex by default.
- A life insurance purchase: Life insurance policies can be a useful source of financial support for your family and loved ones (including coverage of education expenses). Keep your policy tailored to your needs, and be sure to update your list of beneficiaries on a regular basis.
- A home purchase: When you purchase or refinance your home, title the asset appropriately. If you’ve established a trust, lenders can take property out of a trust during a refinance. As with any other large life change or milestone, make sure the title supports your goals and your estate plan stays accurate.
- Having a child: When you add a new member to your family through birth or adoption, your estate plan should rate high on your list of priorities. Your plan will cover who inherits your assets upon your death, but it also affects who will take over guardianship of your child if you pass away or become incapacitated. Your estate plan will continue to change as your child grows and more new children arrive.
- A new business: If you start a business or undergo ownership changes in a current business, you’ll need to revisit your estate plan and determine what impact these changes will have on your current document. Keep in mind that any tax implications could affect your heirs, and you can avoid problems by taking the time for proper planning.
- Death of a loved one: When we lose a loved one, our own estate plan doesn’t always occupy an important place in our minds. But if the person was listed in your will, as a recipient of your assets, a guardian for your children, an emergency contact, or an executor of your estate, changes will need to be made as soon as possible so your plans can stay valid. Don’t leave these roles vacant, and recognize that transitioning them to new people will take some time and attention.
- A cross-border move: Moving from one state or country to another can have a major impact on your estate plan, so review your plan and make sure it complies with local laws. If you own property in multiple states, you’ll need to review how those assets are distributed by your current plan.
- Change in work status and benefits: A promotion, a new job or a benefit change on the part of the company can impact your estate plan and also the nature of your available assets. After the change, can you do more with what you have? Are your goals still achievable?
Estate Planning Guidance
If you have questions about setting up an estate plan for the first time or reviewing your plan in the face of a major life change, contact us. We’ll help you understand your options.