An updated estate plan ensures your assets are distributed to desired heirs and much more.
The world we live in requires constant updates.
Phones, computers, and apps make changes and improvements to their systems.
Often failing to update operating systems means your device loses functionality and security.
According to a recent CNBC article titled “Be sure to keep your will or estate plan updated. Here are 3 key reasons why,” the same is true of estate planning.
Many Americans do not prioritize estate planning.
In fact, about half of Americans do not even have a last will and testament.
They would be wise to schedule an appointment with an experienced estate planinng attorney today.
Those who already have an estate plan may need to schedule an appointment to get their plan updated.
Why is reviewing your estate plan regularly important?
As time passes, life circumstances change.
You may welcome a new baby, get divorced, lose a loved one to death, adopt a child, move to another state, or receive an inheritance.
All of these personal circumstances would require your estate plan to be updated.
When you review your plan, you should consider the person you appointed as the executor.
Is this person still considered trustworthy?
Is this person still alive and willing to serve in this role?
Have you appointed a “runner up” in case your first choice is unable or unwilling to serve?
The executor is responsible for following your instructions listed in your last will, to include any for liquidating assets, for selling your residence, and for distributing assets.
Bottom line: the person you originally selected may no longer be the appropriate person for the job and, with no successor appointed, your estate plan could be in trouble right out of the gate.
In addition to the executor, you should also review your guardian designations.
If your last will and testament was created before your children were born, you may not have a guardian nominated.
If your children were babies when you first designated guardians and are now teenagers, they have different needs.
You may choose someone who lives in the same school district or who is better able to manage adolescents.
As with the executor, it is important to name backup guardians if the first choice is unable or unwilling to serve.
Failing to do so may leave your children in foster care.
Your power of attorney for financial and healthcare matters may also need to be updated.
Your brother-in-law may have been a wizard with accounting, but the divorce from your sister may make him a poor choice for managing your financial affairs.
Additionally, you may have originally listed the same person to make your medical decisions and your financial decisions but now wish to divide the responsibilities.
Beneficiary designations should also be reviewed and updated regularly.
Because assets like life insurance and retirement funds are directly distributed to the person named on the account as beneficiary, updating your last will and testament has no impact on these assets.
If these are not updated, then you could leave significant sums of money to someone who is no longer in your life and disinherit your loved ones.
Because certain retirement accounts and pensions must pass to the current spouse, your spouse will need to disclaim these rights through signing legal documents to ensure these are distributed to your preferred choice.
This is oftentimes the case with blended families.
Designating contingent beneficiaries is also important because the assets will end up in your probate estate if all listed individuals are dead.
Personal circumstances are important reasons to review and update your estate planning.
External influences are equally influential.
The state and federal government make changes to laws regularly.
To ensure you satisfy any applicable tax laws, you should work with an experienced estate planning attorney to keep your estate planning legal documents updated and in good working order.
Reference: CNBC (Jan. 27, 2022) “Be sure to keep your will or estate plan updated. Here are 3 key reasons why”