Is Your Estate Plan Keeping Up With You?

Quickly tally the changes in your life over the past five years. Perhaps you have married or divorced, had a child or increased your wealth. Now, if you haven’t accounted for these changes in your estate plan, your assets could be distributed quite differently than you’d like.

Changes Signal Review

Here are some common events that signal it’s time to review your estate plan:

You marry. In most states, your spouse is legally entitled to claim a percentage of your property after you die, unless you have a written agreement to the contrary. In addition, federal law states that your spouse is the sole beneficiary of your employer-sponsored retirement plan, but he or she can waive those rights in writing. If these plans are a significant portion of your estate, be sure to consider this stipulation carefully.

If you now have stepchildren, consider if or how you want to include them in your estate. A trust is one way to help manage divided loyalties in a blended
family. It can provide your spouse with income during his or her life, while
remaining assets go to your children at your spouse’s death.

You have a new life partner. Consider titling major items, such as your home,
as joint tenancy with rights of survivorship so that upon death, the other owner immediately inherits the property. Also, your will, beneficiary designations, and a
trust can be useful tools to provide for your surviving partner.

You have children. In your will, be sure to designate a guardian for your children if both you and the other parent are unavailable. Otherwise, the courts will make the decision for you. If you don’t have a will, some of your property may go directly to your children, and your surviving spouse may need the court’s permission to spend or invest the money. Also, consider buying life insurance to replace your earnings or cover home and/or child care costs.

You divorce. In some states, a final judgment of divorce does not revoke gifts made by your will to your former spouse, so make a new will and change beneficiaries on retirement plans, life insurance policies, and the like. However,
any assets agreed upon in the divorce decree cannot be revoked by your will.

Your net worth changes significantly. Be sure your will reflects currently held assets and determine if the division of property is still in line with your wishes. If you have a large estate, consider options for reducing the portion of it subject to probate. A revocable living trust is one choice. It has no effect until you are incapacitated or die, but lets everything in it go directly to your heirs after your death. And you can revoke the trust or change its directions at any time.^†

^†This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.

When you're ready to plan for the future, download our Savvy Guide to Estate Planning. Our free guide takes the fear and worry out of creating an estate plan and tells you what you need to know to get it done. Download your copy here.