We’ve said it before, and we’ll say it again; and again; and Again!
When you put off updating your estate plan, you’re playing a very dangerous game. This sort of procrastination is downright reckless, and often results in a your loved ones facing additional stress, financial loss, and hurt feelings.
The Wall Street Journal recently highlighted several examples of cases where the originator of a will or trust waited too long to update documents, and the results for surviving family members were costly and emotionally burdensome. It’s a great article and worth your time to read. (https://www.wsj.com/articles/havent-updated-your-estate-plan-in-a-while-its-time-1501078724)
Life Always Brings Change
Your documents should be reviewed by an experienced estate planning attorney whenever there are any major life changes in your circumstances. Those can include a relocation, a marriage, a divorce, property transfers, starting or selling a business, a decline in a your health, the death of a spouse, and the addition of new children or other potential heirs.
We can’t emphasize this enough: When there is a significant life change, your documents should be reviewed and likely updated.
Start with the Revocable Living Trust and/or Will
A trust and will are living documents and need to be updated regularly – at least every five years. Anytime you experience a major life change, these documents should be updated as soon as possible to reflect that change.
Also, if a spouse passes away, then you should consider immediate trust administration and update your will with new beneficiaries. If you fail to do so, you risk putting loved ones through costly and stressful probate proceedings to straighten out the inheritance issues down the line.
Review Retirement Plans
A retirement plan beneficiary designation is one of the most often overlooked parts of anyone’s planning. Unlike other assets, retirement plans are not disbursed by a will or a trust. Instead, they are released based on the beneficiary forms on file with your financial institution.
Too often, people neglect to update these beneficiary designations when their originally identified beneficiary (usually a spouse) dies or they divorce.
Long Term Care
Many clients willfully ignore their advancing age and the possibility that one day they may be unable to care for themselves physically. They don’t like to think about paying for medical care.
A single room in a private nursing facility can cost thousands of dollars per month and can quickly wipe out a life savings. If you lack a “strategy” to protect your assets and your family from the costs of long term care, you are risking your quality of life in your most vulnerable years.
The WSJ points out another reason that you should consider updating your estate plan – the possibility that you could outlive your children.
It’s an unexpected tragedy most clients don’t consider when creating their plans. But if the child dies first, what financial or legal consequences might result if you never updated your estate plan?
An Annual Discussion
As an advisor, we recommend that you should have an annual conversation about unexpected life changes, and how they could affect your planning and financial decisions.
We hope this information is useful to you and helps you to consider a review of your estate plan. Please don’t hesitate to contact our office if you have any questions and would like to discuss your estate plan.