Many people plan for retirement. But it’s just as important to plan for what happens to your property after you die. Having a good estate plan offers peace of mind. It lays out precisely what happens to your belongings after your death.
Planning your estate is important for your surviving family members. Estate plans can help your family avoid probate. It can also help them reduce or avoid estate tax liability. These plans sometimes include other essential decisions, such as:
- Who will care for your young children
- Decisions about your health if you are unable to make them on your own
- What happens to your body after death
A good estate plan also helps avoid conflict among family after your death. And it ensures that your wishes are carried out. However, it’s also important to review your plan with a lawyer every few years to avoid confusion.
Why Should You Keep Your Estate Plan Updated?
Estate plans are legal documents. But that doesn’t make them foolproof. One of the most common reasons why estate plans fail is that they are not updated at regular intervals. Instead, they become outdated or ineffective. That’s why it’s important that you review your estate plan with your attorney to see if there are any issues you need to address.
How Often Should You Review Your Estate Plan?
To ensure your wishes are carried out after you’re gone, you should update your estate plan at regular intervals. It’s a good idea to review your estate plan at least every five years.
You also may need to update your plan to reflect any significant life changes, such as the birth of a new child. You may also consider updating your plan if you become married or divorced.
Life Events that May Change Your Estate Plan
Life events are important moments that occur in your life. If you go through any of the following major life events, consider updating your estate plan accordingly:
- Marriage or divorce
- Birth or adoption of a new child or grandchild
- Death or change in circumstances with the guardian named for your minor children
- Your child or grandchild became an adult
- Your child or grandchild needs money for education
- A change in the number of dependents
- The disability, illness, or death of a spouse
- The disability, illness, or death of other family members
- You purchase a home
- A significant change in assets
- Your or your spouse received a large sum of money
- You’ve taken on new debt
- You’ve purchased or sold property
- The value of your investments has drastically changed
- Federal or state laws changes that affect your tax planning or investments
- Death or change of situation with your executor or trustee
- You have a major career change or you started or closed a business
What Estate Plan Documents Should I Review?
It’s a good idea to update your estate plan every five years with an experienced estate planning attorney. Discuss with them your current goals and objectives.
Also, conduct a review of your estate plan documents. These legal documents ensure that you control what happens to you and your belongings when you die or if you cannot make decisions on your own. A quick review will tell you right away if your documents need to be updated.
These are the most common estate documents:
Will or Trust: Wills make sure your belongings are passed on to your surviving family members according to your wishes. A trust is a legal plan where someone takes care of your investments and passes them out to your beneficiaries.
Durable Power of Attorney: This lets someone act on your behalf if you can’t do so yourself.
Beneficiary Designations: These are people you assign to inherit investments, such as a 401(k) plan.
Letter of Intent: This letter explains what you wish to be done with certain assets after your death.
Healthcare Power of Attorney: This allows another person to make important health and end-of-life decisions for you if you can’t do it on your own.
Guardianship Designations: You’ll want to name someone as the guardian of your minor children in the event of your death.
Insurance: This includes long-term care insurance, a lifetime annuity, or life insurance. They help protect you or your loved ones’ financial well-being.
What Should You Review When You Update Your Estate Plan?
There are some key areas you may want to discuss and reassess with your estate planning lawyer:
Roles: You will need to assign people to various roles. These jobs include executor, trustee, or power of attorney. Be sure that those you have given roles are still the people you want in them. Are they still willing to perform them? And, can they still do them?
Beneficiaries: Review the heirs listed in your will or trust and check beneficiaries named on other accounts. For example, review life insurance policies and retirement accounts. Are these still the people you want to inherit your assets? It’s usually a good idea to update your accounts to include new beneficiaries, like when a child or grandchild is born in the family. You may also want to make changes if there has been the death of a loved one, a marriage, or a divorce.
Assets: Be sure that your brokerage accounts are titled correctly. This will allow them to pass more smoothly to your loved ones. Consider any new tax laws that may affect how you leave your assets to them. You’ll also want to review your life insurance coverage.
Instructions: You may want to include your medical care wishes if you become incapacitated. If you already have an advanced health care directive, make sure it still expresses your wishes regarding the use of breathing machines, feeding tubes, or other life-extending efforts.
Organization: Finally, you’ll want to review your estate plan to make sure it is set up so your family can easily get the information. List all the documents in your estate plan. Also, list where the information is located. And include any professionals who may have worked on those accounts.
Hire an Experienced Estate Planning Lawyer
A comprehensive estate plan review can help protect your family’s future. It also ensures that your estate meets your needs.
If you’ve had a life change, it has been a few years, or you’re just ready to have someone take a second look at your plan, click here or call us at (571) 200-5559. No matter where you are in life’s journey, the experienced Loudoun County team at Legacy Law Centers is here to help.