Gabriel Katzner - July 12, 2021 - Beneficiary

May is considered National Home Remodeling Month. It makes sense as spring is frequently associated with cleaning, making updates, completing projects, and cleaning out any accumulated winter dirt. Perhaps, you have completed those chores, and your home is in great shape. Do your estate planning documents need to be remodeled? Estate planning is a topic that is frequently neglected until an event makes it impossible to ignore any longer. Learn how to remodel estate planning documents and bring them up to date.

Here are some updates you may want to consider making (or at least verify that they are current):

  • Name changes: Do you need to change your name or that of your spouse or beneficiary?
  • Decision Makers: Do you need to update your chosen trustees, agents, executors, etc., in your estate plan?
  • Beneficiaries: Do you need to add or remove beneficiaries?
  • Inheritance: Do you want to change your inheritance plan for your beneficiaries?

Name changes

When your name changes

If you changed your name but do not need to change the content of your estate planning documents, you may only need to keep copies of any legal paperwork that reflects the name change. For example, if your trusted decision-makers remain the same and your distribution plan remains unchanged, you may not need to take any additional steps. In this case, your trusted decision-makers can use your marriage certificate or an affidavit of name change to show a bank or title company that both names refer to the same person.

However, if your new name is the result of remarriage, you and your new spouse may object to seeing your old surname on your estate planning documents. In that case, you should ask your attorney to assist you in either drafting official amendments to your existing documents or executing entirely new documents. Also, if your name changed as a result of remarriage, you may need to replace your former spouse’s name in your documents with the name of your new spouse.

If a trust you established for estate planning purposes has your old name in the trust title and you have transferred accounts and property to that trust, you should seek legal counsel to ensure that the trust name is properly amended, as well as the retitling of the trust’s accounts and property. It may seem easier to keep your trust name the same so that you do not need to make these changes. However, this can lead to misunderstandings. That is why, in this case, it is best to consult with an attorney.

Your beneficiaries name changes

You may not need to update your documents if your beneficiary can demonstrate that they and the person named in your documents are one and the same. A court order, marriage certificate, or birth certificate can be used to establish a name change.

Writing on your estate planning documents can cause issues in the future. If the intent of the edited document is unclear, determining your intent may require litigation. It is not uncommon for courts to have to weigh in on ad hoc edits to determine who made the changes, what their intent was, and whether the changes were valid. What may seem to be a minor and harmless change can result in unintended consequences.

Adding or removing beneficiaries

The birth of a child or the death of a beneficiary may change your estate plans, or it may not. Many estate planning documents are written to account for future family members as well as the deaths of beneficiaries.

The language in your estate planning documents may assume that you want all of your children to receive an equal share of your accounts and property and that your grandchildren should inherit the share of their deceased parent. However, not all estate planning documents are written in this manner. You may need to have your attorney add or remove a beneficiary by name to assure your intentions are properly carried out. Please do not try to add or remove beneficiaries without consulting your attorney. Doing so can have serious legal ramifications. In some cases,  though your intentions may be good, your changes may lead to having a beneficiary barred from receiving an inheritance. Your property may end up going to people whom you never intended to benefit.

An example of how complicated family situations can become:

  1. A couple decides to leave a small portion of their estate to each of their children’s spouses.
  2. They add the spouse’s names to the list of children in their estate planning documents.
  3. One of the blood-related children dies, and their spouse remarries.
  4. The parents die.
  5. The former-in-law becomes a beneficiary of the family trust and has certain rights under applicable state law.
  6. The former-in-law may be entitled to copies of the trust documents and any financial accountings. They may sue to get their share of the trust.
  7. Once paid, the former-in-law can use it in ways that the parents never intended.

Appointing new decision-makers

Suppose you review your estate documents and realize that you no longer want the person you named as trustee, executor, or agent to make important decisions about your property if you become incapacitated or die. It seems easy enough to cross out one name and substitute it with another. However, certain legal documents are not this easily amended. In fact, under certain conditions, writing on a legal estate planning document can render the document null and void.

When making significant changes, the best policy is to have the documents redrafted with the same formalities as the original documents while still adhering to any applicable state laws. Your state, for example, may require multiple unrelated witnesses to sign a new will, even if your will only contains a one-sentence change. The same is true for a will codicil or amendment. Other documents, such as a power of attorney or a trust amendment or restatement, may require similar formalities, such as having your signature notarized.

Changing distribution shares

You might be tempted to change the distribution provisions of your will or trust by adjusting the percentage or fraction shares of your estate from time to time. Please consult your attorney if you want to change the distribution provisions of your will or trust. These types of changes should be carefully considered and carried out using strict formalities and documentation. There is a risk that your beneficiary, who now is going to receive less than they anticipated, will challenge the will and use any argument possible to have the changes invalidated. Working with your experienced estate attorney can help ensure that your wishes are honored by your beneficiaries after you have died.

Estate planning is a complicated process, and there are many potential pitfalls to avoid. Minor changes in your estate documents aren’t always costly. By drafting an amendment to your estate planning documents, your attorney will be able to quickly and inexpensively resolve some of these minor issues. Other changes may necessitate more effort because the issues are far more complex than you first realized. In either case, you can be confident that, with an experienced estate attorney guiding you through the process, you will not leave your loved ones with a legal mess to sort out after you have passed away.

An experienced probate and trust administration attorney can help you resolve any legal matters that may arise while reviewing and updating your estate documents. You are welcome to schedule a call with us or reach us directly at 855.434.2062 to learn more about how best to plan today to protect those most important to you.

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