While many people know, at least in theory, the value of getting estate planning documents in place, even fewer people understand the importance of ongoing estate planning. Good estate planning is not a one-time event, but an ongoing process. Decisions made in the process of estate planning are not set in stone. Circumstances do change, though, and estate plans should be updated along the way.
One event that should trigger a review of estate planning documents is marriage. Because of the financial and legal implications of marriage, it is smart to update one’s living trust and Will and/or Will to ensure the provisions address any concerns and match one’s goals. One may also wish to address the issue of separate property, as well as how community property will be handled.
Likewise, having a child, adopting a child, or taking in a new stepchild should all prompt a review of one’s estate plan, particularly so that proper guardians are appointed and inheritance provisions are set up.
The death of a spouse and divorce are two other events that should prompt an estate planning review. These events may prompt a change in beneficiaries and trustees or a change in Powers of Attorney.
The purchase or refinance of a home would be another good time to revisit one’s estate planning documents. One thing that isn’t always obvious to folks is that, if they have a living trust, it is best to place one’s home in that trust. Sometimes lenders will remove the home from the trust in order to refinance and then forget to put it back in. Or, when buying a home, folks sometimes forget to take title in the name of the trust. A review of one’s estate plan can avoid these oversights.
When opening new accounts, it is smart to ensure they are placed in trust, since this will allow them to avoid probate and will make transfer of title easier.
Looking at estate planning as an ongoing process is a smart thing to do, since our lives constantly change. Along with those changes come changing estate planning needs, and these should be updated with each important event.
Source: Forbes, “5 Life Events That Require An Estate Planning Review,” Michael Chamberlain, August 13, 2012