Updating Your Estate Plan:
A Vital Step in Securing Your Legacy
introduction
Life is dynamic!… and your estate plan should reflect the changes in your life circumstances. Regular updates to your estate plan ensures that your wishes are carried out effectively and that your loved ones are protected. Here are some key life events that might prompt you to revisit your estate plan, along with actionable steps to take when these events occur.
family changes
Your family is central to your estate plan. Major life events like marriage, divorce, the birth of a child, or the arrival of grandchildren can significantly impact your estate planning needs.
- Marriage: Consider how each spouse will be provided for in the event of incapacity or death of the other spouse. Review and potentially update beneficiary designations, wills, and any prenuptial agreements.
- Divorce: A divorce necessitates revisiting your estate plan to make any necessary changes to remove your ex-spouse as a beneficiary, trustee, or executor, unless you still wish for them to have a role in your estate.
- Children and Grandchildren: The birth of a child or grandchild may require updates to guardianship designations, trusts, and how assets are distributed.
Action Steps:
- Schedule a family meeting to discuss estate planning intentions.
- Work with your estate planning attorney to update your trust, will and beneficiary designations. Your financial and tax advisors should be included in your update.
Resources:
- Guardian Designation Worksheet: A tool to help you select and document your child’s guardian.
Change in Financial Circumstances
As your financial situation evolves, so too should your estate plan. An increase or decrease in income, assets, or liabilities may require adjustments.
- Increase in Wealth: If you’ve experienced financial growth, consider how this impacts your tax liabilities and asset distribution.
- Decrease in Wealth: Conversely, a drop in your financial status might necessitate scaling back certain provisions or altering how assets are managed and distributed.
Action Steps:
- Conduct a comprehensive financial review with your financial advisor.
- Update your estate plan to reflect your current financial situation and goals.
Resources:
- Net Worth Calculator: A tool to assess your current financial standing.
Website: Financial Calculator
- Tax Planning for High Net Worth Individuals: Oregon Department of Revenue
Website: Personal Income Tax
geographical move
Moving to a new state or country can have significant implications for your estate plan, as laws vary by jurisdiction.
- State-to-State: Each state has different rules regarding wills, trusts, and estate taxes. Moving from a state with no estate tax to one with a hefty tax could dramatically alter your planning needs.
- International Moves: If you’re moving abroad, consider the impact of international estate taxes, asset protection laws, and foreign wills.
Action Steps:
- Consult with an estate planning attorney in your new state or country to review and adjust your estate plan.
- Ensure that your estate documents comply with local laws to avoid legal complications.
Resources:
- National Association of Estate Planners & Councils
Website: NAEPC
- The American College of Trust and Estate Counsel
Website: ACTEC
change in tax law
Tax laws are constantly evolving, and changes in estate, gift, and inheritance taxes can have a substantial impact on your estate plan.
- Federal Tax Changes: Changes to federal estate tax exemptions or rates can necessitate a review of your plan.
- State Tax Changes: Some states have their own estate or inheritance taxes, and changes in these laws may require updates to your estate planning strategies.
Action Steps:
- Stay informed about changes in tax law that may affect your estate plan.
- Schedule periodic reviews with your estate planning attorney to ensure compliance with current tax laws.
Resources:
- Oregon Society of CPAs (OSCPA)
Website: Find a CPA
special circumstances
Certain life events create unique needs that may require specialized estate planning.
- Special Needs Trusts: If you have a child with physical or mental limitations, consider setting up a special needs trust to provide for them without jeopardizing their eligibility for government benefits.
- Disability Planning: If you or your spouse becomes disabled, your estate plan should address future care needs and financial management.
Action Steps:
- Consult with a special needs planner to create a trust or other arrangements to care for your loved one.
- Update your durable powers of attorney and healthcare directives to reflect new circumstances.
Resources:
- The ARC of the United State
Website: ARC
- National Academy of Elder Law Attorneys A tool to assess your current financial standing.
Website: NAELA
- Alzheimer’s Association
Website: The ALZ
- Social Security Administration
Website: SSA Disability
WHERE DO WE GO FROM HERE?
Establishing a thorough estate plan is important, but it’s equally essential to update it regularly.
After reviewing your current plan and considering any recent life changes, consult with your estate planning attorney to make any necessary adjustments. Keeping your estate plan up to date ensures that your wishes are honored and your loved ones are provided for as intended.
