You might think that creating a Will or Trust is something you do once and then your family and assets are protected forever. It wouldn’t be surprising if you thought this, as this is the way most lawyers structure their estate planning services. I.e., you create a Will or Trust with your lawyer, he/she drafts documents, you leave the firm with them in a binder, you put them on a shelf or in a drawer, and you never hear from your lawyer again. Estate plan, done. Actually, no, it’s not, and this kind of thinking can leave your family with a big mess if and when something happens to you.
In reality, life events can drastically affect your estate plan and even cause it to play out differently than the way you intended. To make sure your plan remains up to date throughout your life, we recommend reviewing it at a minimum of every three years. Because I am so passionate about this, I offer to review my clients’ plans every three years for free.
If any of the following 10 life events happen before your three-year plan review, you should have your plan professionally reviewed right away. At this point, I’d like to explain in depth how these 10 life events can affect your estate plan and what changes may be required.
01 | Your Assets or Liabilities Changed
Life is full of changes, and your financial situation will likely change several times over time. Changes in your assets, such as acquiring a new home or other assets, selling property, or incurring debt should prompt a review of your estate plan. You may need to update asset distribution, beneficiary designations and financial provisions to reflect these changes accurately and ensure that your loved ones receive what you intend when you pass away. Most importantly, you need to update your asset inventory every time your assets change. If you do not have an asset inventory, please call us to help you update your plan to ensure that an inventory is included. The biggest risk to your family in the event of your incapacity or death is that they are not aware of your assets, where they are, or how to find them. Updating your asset inventory regularly can solve this problem.
02 | You Bought, Sold, or Started a Business
Owning a business adds another layer of complexity to your estate plan. If you’ve recently bought, sold, or started a business, it’s essential to update your plan to reflect your intentions regarding your business when you die, to ensure a smooth transfer of ownership (if desired), and to create a plan to protect your business assets for yourself and your loved one’s future.
The financial and personal value of your business can be a significant gift to your loved ones, both today and for years to come—if it is incorporated into your estate plan correctly.
03 | You Gave Birth or Adopted a Child
Welcoming a new child into your family is an incredibly joyful moment, and also signals that you need to update your estate plan to include provisions for your child’s well-being and financial future. This includes naming Guardians for minor children, creating a Kids Protection Plan, and ensuring their financial security through Trusts or other means.
It’s also important to document your wishes for your child’s education, religion, and values in your plan so that their his/her Guardians will know how you would want your child raised if something happened to you.
04 | Your Minor Child Reached the Age of Majority (or Will Soon)
As your children grow up and reach the age of majority, this is the time to review how they will receive their inheritance, ensure that someone can legally make healthcare decisions for them, and manage their finances in the event that they become incapacitated. Depending on their level of maturity, you may want to consider if they are ready to handle assets on their own and if so, what amount.
A more solid idea is to provide lifelong protection of your child’s inheritance through a Lifetime Asset Protection Trust. This estate planning tool enables your child’s inheritance to be used to support your his/her future, while safeguarding its use and protecting it from any potential future lawsuits or divorces your child may face later in life.
This type of trust ensures that your children are financially secure as they head into adulthood, while also assigning them financial responsibility.
05 | A Loved One Died
The loss of a family member is emotionally devastating, and can significantly affect your estate plan. If a deceased loved one was a recipient of assets under your Will, Trust or financial accounts, it is imperative that these documents are updated to make sure your assets will be distributed to the correct recipients.
Additionally, if the deceased individual was designated as a Trustee or Executor of your estate or a Guardian of your minor children, you will need to appoint new individuals to fill these roles.
Planning for Life’s Changes
Your estate plan is a crucial foundation that protects your family and your finances today and in the future. But estate planning is not a set-it-and-forget-it task; rather, your estate plan should change and evolve with the changes in your life.
As your Personal Family Lawyer® firm, we’re here to guide you through life’s changes to keep your estate plan up-to-date and effective, so that you can have peace of mind knowing that your plan will be executed exactly how you want it to be when your loved ones need it most.
If you’ve recently experienced a significant life event or if it has been some time since your last estate plan review, now is the time to review your plan. If you haven’t created an estate plan yet, I strongly urge you to start the process now. Having no plan at all is truly a regrettable place to be.
To get started, contact me to schedule a free 15-minute discovery call to learn more about my Family Wealth Planning Session process. We’ll discuss your family dynamics and goals, address any changes in your life, and create a comprehensive estate plan that achieves your wishes and brings you peace of mind.
In my next article, I’ll discuss five more life events that signal it’s time to review your plan.