Which Life Events Require an Immediate Estate Plan Update?

Estate planning is the process of developing a strategy for the care and management of your estate if you become incapacitated or upon your death. One commonly known purpose of estate planning is to minimize taxes and costs, including taxes imposed on gifts, estates, generation-skipping transfer, and probate court costs. However, your plan must also name someone who will make medical and financial decisions for you if you cannot make decisions for yourself. You also need to consider how to leave your property and assets while considering your family's circumstances and needs.

Since your family's needs and circumstances are continually changing, so too must your estate plan. Your plan must be updated when certain life changes occur. These include, but are not limited to: a pandemic, marriage, the birth or adoption of a new family member, divorce, the death of a loved one, a significant change in assets, and a move to a new state or country.

A Pandemic: There are deadly viruses that may impact the lives of some but not others. The COVID-19 virus has taken the lives of millions of individuals during 2020 and 2021 and is reason enough to get your estate plans in order. Because no one knows how their body would respond to the virus if they were to become infected, it is best to be prepared just in case. The experience we have had in these last twelve (12) months or so have been very unexpected and filled with the loss of loved ones or even knowing someone that has lost a loved one. It is essential at this time to get a comprehensive estate plan done to ensure that there are instructions in place if you become incapacitated or if you pass away.

Marriage: it is not uncommon for estate planning to be the last item on the list when a couple is about to be married - whether for the first time or not. On the contrary, marriage is a necessary time to update an estate plan. You probably have already thought about updating emergency contacts and adding your spouse to existing health and insurance policies. There is another crucial reason to update an estate plan upon marriage. In the event of death, your money and assets may not automatically go to your spouse, especially if you have children of a prior marriage, a prenuptial agreement, or if your assets are jointly owned with someone else (like a sibling, parent, or other family members). A comprehensive estate review can ensure you and your new spouse can rest easy.

Birth or adoption of children or grandchildren: when a new baby arrives, it seems like everything changes - and so should your estate plan. For example, your trust may not “automatically” include your new child, depending on how it is written. So, it is always a good idea to check and add the new child as a beneficiary. As the children (or grandchildren) grow in age, your estate plan should adjust to ensure assets are distributed in a way that you deem proper. What seems like a good idea when your son or granddaughter is a four-year-old may no longer look like a good idea once their personality has developed and you know them as a 25-year-old college graduate, for example.

Divorce: some state and federal laws may remove a former spouse from an inheritance after the couple splits; however, this is not always the case, and it certainly should not be relied on as the foundation of your plan. After a divorce, you should immediately update beneficiary designations for all insurance policies and retirement accounts, any powers of attorney, and any existing health care proxy and HIPAA authorizations. It is also an excellent time to revamp your will and trust to make sure it does what you want (and likely leaves out your former spouse).

The death of a loved one: sometimes, those named in your estate plan pass away. If an appointed guardian of your children dies, it is imperative to designate a new person. Likewise, if your chosen executor, health care proxy, or designated power of attorney dies, new ones should be named right away.

A significant change in assets: whether it is a sudden salary increase, inheritance, or the purchase of a significant asset, these scenarios should prompt an adjustment to an existing estate plan. The bigger the estate, the more likely there will be issues over the assets' disposition after you are gone. For this reason, it is best to see what changes, if any, are needed after a significant increase (or decrease) in your assets.

A move to a new state or country: It is a good idea to obtain a new set of estate planning documents that clearly meet the new state's legal requirements for most individuals. Estate planning for Americans living abroad or those who have assets located in numerous countries is even more complicated and requires professional assistance. It is always a good idea to learn what you need to do to completely protect yourself and your family when you move to a new state or country. We are here to help you get fully settled in and build a plan to protect you and your family.

Are you ready to sit down with a qualified estate planning attorney to assess whether it is time for you to revise your estate plan? There's no time to waste — the sooner you take stock of your estate and get critical documents like wills and trusts completed, the better. Give the Thompson Mungo Firm a call today to schedule your appointment or stop by our office at 390 Racetrack Road, McDonough, GA 30252.