Review Your Estate Plan After These Major Changes
Estate planning should be an ongoing thing. Once you have created your first estate plan, you may need to evaluate and modify it every few years. A review is especially necessary whenever a substantial change occurs in your life. Below are examples of major life changes that necessitate reviewing your estate plan.
Changes in Family Setup
A significant change in your family setup means you should evaluate your estate plans. Here are some examples of such changes.
Modify your estate plans to include your partner after marriage. Your partner stands to inherit your estate, whether you include them in your estate plans or not. Your estate distribution will be efficient if your spouse is one of your beneficiaries.
Your former spouse can inherit your estate if you don't remove them from your estate plans. Therefore, if you don't want your former partner to inherit your assets, you have to modify your estate plans and remove them.
You may get a new child in the family after adoption, birth, or marriage (if your partner has a child from a previous relationship). Include the child in your estate plan as soon as possible to avoid potential complications.
A death in the family can be devastating and modifying your estate plan is one more thing you need to do if you lose one of the beneficiaries. For example, you may want to replace the deceased with a new beneficiary or redistribute their share of your estate to the remaining beneficiaries.
Changes in Assets
Asset distribution forms a significant part of estate plans. Thus, you should modify your estate plans if you lose or gain some assets. You may need to:
Remove provisions for assets you have lost
Redistribute the remaining assets
Add newly-acquired assets to your estate plans
You don't need a modification for every little change — just the substantial changes.
Changes in a Beneficiary's Health
Many people want to use their estates to take care of their loved ones after death. Your loved one's needs might change substantially if their health changes. For example, a child who has lost their limb in an auto accident might need more money than their siblings. A child with a chronic illness who suddenly recovers might not need as many resources as you previously thought.
Changes in Laws
Estate planning laws, just like other government laws, are not static. Evaluate your estate plans whenever your state enacts a substantial change in tax or estate planning laws. For example, changes in the law might increase inheritance taxes. An increase in taxes reduces your beneficiaries' inheritances. You may want to redistribute your assets to incorporate the effects of such changes.
New laws are not always easy to understand. Consult an estate planning lawyer to help you evaluate such laws before you modify your estate plans.
A Change in Residence
Estate planning laws vary by state. Whenever you move, review your existing estate plans in accordance with the laws of your new state. Make the relevant changes so that your estate plans still accomplish your goals.
For example, some states have estate taxes, while others don't. Pennsylvania doesn't have an estate tax but charges inheritance tax for beneficiaries who are not closely related to the deceased. Therefore, you should modify your estate plans if you move from a state with an estate tax to Pennsylvania.
Changes to your estate won't always be instantaneous or obvious. Some changes may creep up on your estate unnoticed. Such changes mean you need to evaluate your estate plans every few years, even if you haven't noticed a major change. Contact Kalasnik Law Office to help you evaluate your estate plans and make the relevant modifications.