Think of Your Estate Plan as a Living, Breathing Instrument That Evolves as Your Life Unfolds

The legendary singer and songwriter John Lennon of The Beatles once said, “Life is what happens to you while you’re busy making other plans.” This truism applies to the plans you’ve made to provide for loved ones at death, too. As your career path changes, your wealth increases, and your family structure expands and takes shape, so may your intentions for passing inheritances.

You’ve Done One Thing Right

Before we dive into the nuts and bolts of updating an existing estate plan, take a moment to congratulate yourself for putting together this vital instrument in the first place. Unlike a great number of Americans, including very successful people like celebrities and entrepreneurs, you have taken the crucial step of setting forth your objectives in writing. You carefully selected one or more individuals to manage and distribute your estate properly and delineated your beneficiaries such as your spouse, children, friends, and charitable organizations. If you are a business owner, you have also crafted a succession plan for your profitable business which will likely survive and thrive in the event of your passing. Kudos to you!

Estate Planning Is Not a “Set It and Forget It” Task

While you may love the subscription feature of many contemporary sellers such as Amazon, which allows the convenience of purchasing in advance and the comfort of knowing that your order will arrive on your doorstep with reliable regularity, keeping your estate plan fresh doesn’t work that way. If you engaged a competent and proactive law firm to create your Living Trust, you may receive consistent reminders to consider any necessary changes. But even the best attorney cannot read minds and may not realize that your financial or personal scenario has shifted dramatically, so it is up to you to make sure your plan reflects your current wishes as time marches forward.

The Top Ten Reasons To Update Your Will, Trust, and Other Estate Planning Documents

  1. Divorce: If you are in the process of divorcing your spouse, or your divorce is final, it is vital that you seek an estate planning attorney to advise you and update documents. Your unforeseen or premature death could necessitate a default to the plan you created with your former spouse, making him or her the beneficiary of your estate and the manager of your healthcare decisions. Obviously, you may find this to be highly undesirable so don’t skip this crucial step.
  2. Marriage: On the brighter side, it is also necessary to recalibrate the terms of your plan if you’ve tied the knot, especially if it is a second or third marriage with separate kids. Even if you don’t decide to leave your new spouse any portion of your assets, it is critical to spell this out in writing.
  3. Changes in Health: If you or your spouse has a serious medical diagnosis or is experiencing a worsening condition, this may be the perfect time to review your current trustee and beneficiary designations, as well as your distribution plan, and consider potential revisions.
  4. Real Estate Acquisitions or Refinances: If you have expanded your empire by purchasing homes, land, rental, or vacation properties, these should be titled in the name of your trust, which is often overlooked in the excitement and stress of completing such purchases. Tip: When refinancing property, some lenders require that the property is transferred from your Living Trust to your individual name to qualify for the refinance. Make sure that this property is titled back in the name of your Trust at closing or contact your estate planning attorney to do it for you.
  5. Births and Adoptions: If you, or your adult child, has a baby or legally adopts a child, this is a key reason to rethink the apportionment of your assets.
  6. Passage of Time: It is easy for the years to slip by without realizing that the person you designated as Trustee is no longer your friend, or has moved out of the country, for example. This outdated selection is no longer viable, so it is wise to proactively replace the Trustee, avoiding confusion and additional hurdles if you lose capacity or pass away.
  7. Children Grow Up: A minor child reaching adulthood may prompt you to elevate them to Trustee status. Or, alternatively, you may wish to delay their inheritance until they’ve finished college or reached a more advanced age and maturity level.
  8. Making a Move: If you have relocated to another state, this is an optimal time to review your plan for relevancy and to update state-specific documents such as your Advance Health Care Directive. Identify a local attorney who is knowledgeable about estate planning matters.
  9. Tax Law: The estate tax landscape sometimes seems to consist of shifting sands. Especially if your plan is more than ten or twenty years old, the current climate may be vastly different than it was when the Trust was initially crafted. Raise these issues with both your tax and legal professional.
  10. Death of Beneficiary: If one of your primary beneficiaries is deceased, check to see who is named as a backup beneficiary and determine if this still fits your desired outcome.

A Final Word

It is important to note that if your spouse passes away, a consultation with an attorney is in order. There are often important documents to prepare and sign, legal and tax advice to consider, and there may be other necessary steps such as notifying beneficiaries. You do not have an obligation to return to the attorney who drafted the original Trust, you may retain any attorney you like.

Article by Zakiya J. Norton and Somita Basu

Zakiya J. Norton is a big-picture thinker who practices with precision, sharp insight and a touch of humor. Zakiya delivers innovative, top-notch advice in terms everyone can understand. Known for her ability to grasp the family history and personal intentions which inform each estate plan, she offers compassionate counsel and no-nonsense legal strategies in her affable, straightforward speaking style.

Somita Basu has a knack for unraveling legal, financial, and mathematical mysteries while paying meticulous attention to detail. Always analytical and objective, her tactical methods allow her to identify the optimal way to achieve any goal. With a thorough, hands-on approach, Somita expertly advises on complex matters with diligence and grace.

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