Five Life Events to Discuss with Your Estate Planner

We recommend reviewing your estate plan every five to seven years to ensure it reflects your current wishes and to address any changes in the value of your estate or in the tax laws. But sometimes, life can surprise you with a major event in between those regular reviews. The following life events can have a significant impact on your estate plan and merit scheduling an appointment with your estate planning attorney right away.

1.  Your Marital Status Changes

• After you get married, you should update your estate plan to account for your new spouse.  Although your spouse may have certain rights by law, if you don’t update your estate plan, your assets will for the most part go to whomever you designated in your Will or Trust before you were married.  You also will likely want to add your spouse as your agent to make health care decisions for you and manage your financial affairs if you cannot do so yourself. 
• After a divorce, you’ll want to update your estate plan to remove your ex-spouse as a beneficiary under your Will or Trust and as an agent for health care and financial decisions.  If you have minor children, you’ll want to appoint someone other than your ex-spouse to manage any assets they inherit from you. 
  
  

2.  The Value of Your Estate Increases Significantly

• If your net worth increases significantly – perhaps you’ve received a large inheritance, sold a company, or won the lottery – you and your estate planner should review your estate plan to determine whether any changes are needed to mitigate potential estate tax liability. 
  
  

3.  Your Spouse Dies

• When your spouse dies, it is imperative that you meet with your estate planning attorney to discuss settling your spouse’s estate.  If you have a Will-based estate plan, you will likely need to initiate a probate proceeding to transfer joint assets into your name only.  If you have a Trust-based plan, the terms of your Trust may require that the assets in the Trust be placed into two new trusts.  You will also want to discuss with your estate planning attorney whether you should file an estate tax return for your deceased spouse electing “portability,” which would enable you to receive the benefit of your spouse’s estate tax exemption.  Most spouses also typically appoint each other as agents so you’ll want to update your powers of attorney to name new agents.
  
  

4.  One of Your Beneficiaries Develops Special Needs

• If one of your current beneficiaries or a potential future beneficiary (such as a grandchild) develops special medical needs and is receiving needs-based federal assistance (or may do so in the future), you should update your estate plan to include a special needs trust.  A special needs trust holds assets left to a beneficiary with special needs in a trust for that beneficiary which is managed by a third party and structured so the beneficiary will not lose their eligibility for federal assistance.  Without a special needs trust in place, any assets inherited by the beneficiary may cause them to lose their needs-based federal assistance until they spend down all of their inheritance.  Not only that, but once the beneficiary has accomplished the spend down, they will have to undertake the arduous and time consuming process of re-applying for federal aid. 
  
  

5.  Someone You Picked as a Fiduciary (Trustee, Personal Representative, Guardian, Agent) Is No Longer Your Choice

• Your fiduciaries play a critical role in your estate plan.  Your Trustee or Personal Representative is charged with settling your estate and distributing your assets after you die.  Your Guardian will care for your children if you die when they are minors.  Your agents for health and finance will manage your affairs and make decisions for you if you are incapacitated.  Whether it’s because your children have grown up, someone you’ve appointed as a fiduciary has moved, passed away, or is no longer able to serve in the role, or your own needs have changed, if you want to change who you’ve chosen as a fiduciary, you should discuss this as soon as possible with your estate planning attorney. 
  
  

If life surprises you with any of these events, or with any other significant life events that affect your wishes, please call our office to schedule an appointment to review your estate plan.