Life Changes

Yes, You Do, and Here’s Why

Please allow us to be frank. It’s unrealistic to think that a piece of paper you draft, reflecting your life at a certain time, will work when your life has completely changed some years later. We’ll use the Kendrick family as an example.

Meet the Kendricks

Meet Bill and Karen Kendrick. They got their first estate plan in place when their daughter, Jessica, was born 30 years ago. They updated it when their son Steve came along 4 years later. After attending one of our living trust seminars 10 years ago, they got a fantastic trust-based plan in place, protecting themselves, their children, their grandchildren, and their dog, Sadie.

Unfortunately, the Kendricks didn’t join our client maintenance program; instead, they elected to take responsibility for calling us for updates themselves. Life got busy and, as you might guess, they never called to update their documents.

Here’s what’s changed in their lives in the last 10 years.

• Jessica and Steve are now adults and have graduated from college.
• Jessica is married and has two daughters. One of the girls may have autism.
• Steve is also married, and he and his wife are expecting their first child.
• Karen’s mother is now living with Bill and Karen.
• Bill and Karen bought a vacation home in Florida.
• Sadie had a litter of puppies but has since passed away.  Bill and Karen kept two of the puppies.

Do you think their estate plan will still work the way they want it to?

Changes in Your Own Life

The Kendricks have experienced a lot of changes, but those changes are typical of what 10 years brings. Think about the changes in your life over the past 10 years — or since you last updated your estate plan.

Have you moved? Do you have more children or grandchildren? Have you started a business, suffered health problems, or purchased a new home? Do you have new accounts and investments? Do you now care for a parent, pets, or dependent children? Have you remarried, gotten divorced, or retired? Has someone you loved died? Have friends or family named in your plan as trusted helpers moved away, or has your relationship changed? Are your children now adults and able to help you? Do you want to help with grandchildren’s college or dance lessons? Do you see the world in a different way?

Many things have happened in the past 10 years. Your estate plan needs to reflect the changes in your personal life, financial situation, and goals. There have also been changes in the law. We stay abreast of these changes to protect our clients in better and better ways, so the way we do things has changed.

Is Your Estate Plan Out of Date?

If you’ve experienced changes like the Kendricks, or it’s been more than 3 to 5 years since you updated your estate plan, it’s time to come in. We’ll review your plan and chat with you about what’s been happening in your life. We can get you and your estate plan up to date, reflecting where your life is now.

Many people who put together an estate plan do so when they start a family – assuming they put an estate plan together at all during their lifetime. While putting an estate plan together is a good thing to do, many people make few updates once the plan has been created, despite other key life events happening over the years. This is a major mistake that can place your hard-earned money and assets into a costly probate or into the wrong hands. To make sure you do not run into these issues and your wishes are followed in the event of your death or incapacity, below are nine life decisions or events that should get you thinking about updating — or creating — your estate plan right away.

Important Life Decisions

There are several important life decisions that you should factor into your estate plan. They include:

• Getting married: Estate planning after tying the knot does not have to be complicated. Simply updating your beneficiary information, purchasing a life insurance policy, and updating emergency contact information are all things that should happen right away. You should also consider preparing a will and a living will. As your marriage progresses, it may make sense to consider a revocable trust as well. Having discussions with your spouse about how you want your estate to be managed depending on different scenarios is also important.
• Getting divorced: While couples do not plan for divorce, many spouses go through this process. For many, the emotional toll and legal complexities of divorce can be overwhelming. Oftentimes estate planning is overshadowed by the divorce, resulting in unintended consequences. Making sure you make changes to your estate plan as soon as your divorce proceedings have been finalized will make sure your ex will not end up with the house, life insurance proceeds or other assets of yours.
• Buying life insurance:  These policies are present in virtually all estate plans and serve as a useful source of liquidity, education-expense coverage, and financial support for your family or loved ones. Make sure to list all beneficiaries under the policy and make sure to update them as time passes.
• Buying a new home: When you purchase or refinance a home or other real estate, you should always make sure the asset is titled appropriately. If you use a trust, sometimes a lender will take a property out of a trust during a refinance. The key is to make sure your title furthers your goals.
• Having a child: While adding another member to your family is an exciting time in your life, it is not an excuse to forget to update your estate plan. A new child necessitates major revisions to your estate plan. This not only affects who will inherit your estate upon your death but will also require you deciding who will be the guardian of your children if you should die before they become adults. As your child grows and matures — and more children are added — your estate plan will likely continue to change.
• Starting a business: If you start a business or ownership interest changes in a current business, you need to understand what impact these changes have on your estate plan. Even more, there may be tax implications that could affect your heirs without proper planning ahead of time.
• Death of a loved one: The passing away of someone listed in your will is often overlooked in estate planning. These individuals may be named guardians to your children, have an inheritance allocated to them, be designated as emergency contacts, or may be named as executors of your estate. Leaving the role vacant can have terrible unintended consequences and necessitates transitioning new people to fill the void left behind by your loved one’s death right away.
• Moving to another state or country: When you change your residency from one state to another, you must review your estate plan to make sure it conforms with local laws. The same is true if you move to another country. Likewise, if you have property in more than one state or country, special attention must be paid to how those assets will be distributed according to your estate plan and applicable law.
• Change in work benefits: Whether this happened through a promotion, demotion, or your employer just changed the benefits they offer, this could impact the type of amount of assets you have available. Look at your estate plan to see if your goals are still achievable or if you can do more with what you have.

Estate Planning Advice

Planning based on your life stages is important because your circumstances over the years will surely change. If you have any questions about estate planning — or have had to make a recent big decision in your life — contact us to learn more about your options.

Estate plans are almost magical: They allow you to maintain control of your assets yet protect you should you become incapacitated.  They take care of your family and pets.  And, if carefully crafted, they reduce fees, taxes, stress, and time delays.  Estate plans can even keep your family and financial affairs private.  But one thing estate plans can’t do is update themselves.

Estate plans are written to reflect your situation at a specific point in time.  While they have some flexibility, the bottom line is that our lives continually change and unfold in ways we might not have ever anticipated.  Your plan needs to reflect those changes.  If not, it will be as stale as last week’s ham sandwich and may fail miserably when needed the most.

If anything in the following 5 categories has occurred in your life since you signed your estate planning documents, call us now to schedule a meeting.  We’ll get you in ASAP to make sure you and your family are still protected.

1. Marriage, Divorce, Death. Marriage, remarriage, divorce, and death all require substantial changes to an estate plan.  Think of all the roles a spouse plays in our lives.  We’ll need to evaluate beneficiaries, trustees, successor trustees, executors/personal representatives, and agents under powers of attorney.
2. Change in Financial Status.  A substantial change in financial status – positive or negative – generally requires an estate plan update.  These changes can be the result of launching, winding down, or selling a business; business and professional success; filing bankruptcy; suffering a medical crisis; retiring; receiving an inheritance; or even winning the lottery.
3. Birth, Adoption, or Death of a Child / Grandchild. The birth or adoption of a child or grandchild may call for the creation of gifting trusts, 529 education plans, gifting plans, and UGMA / UTMA (Uniform Gifts to Minors Act / Uniform Transfers to Minors Act) accounts.  We’ll also need to reevaluate beneficiaries, trustees, successor trustees, executors/personal representatives, and agents under powers of attorney.
4. Change in Circumstances. Circumstances change.  It’s a fact of life – and when you’re the beneficiary or fiduciary of an estate plan, those changes may warrant revisions to the plan.  Common examples include:
   Children and grandchildren attain adulthood and are able to serve in trusted helper roles (successor trustee, executor/personal representative, and agent under powers of attorney)
   • Relationships change and different trusted helpers need to be named
   • Beneficiaries or trusted helpers develop overspending or drug / gambling habits
   • Guardians, executors, or trustees are no longer able (or no longer wish) to serve in their previously assigned roles
   • Beneficiaries become disabled and need a special needs trust to receive government benefits
   • Guardians for minor children divorce, move to a new state, or are otherwise no longer appropriate to serve
5. Changes in Venue.  Moving from one state to another always warrants an estate plan review, as states’ laws differ.  Changes may be needed to ensure that you’re taking full advantage of – and not being penalized by – your new state’s laws.  This is also true when purchasing a second home outside of your state.

Estate Plans Are Created to Help, Not Hurt, You

Old estate plans get stale just like old sandwiches do.  You wouldn’t rely on last week’s ham sandwich for lunch; please don’t rely on your estate plan from yesteryear.  If you’ve experienced any of the changes we’ve mentioned in this article, call or contact us today.  We’ll review your estate plan and make sure you and your loved ones are protected.