Posted by: The Life and Legacy Planning Group
It is common knowledge that everyone needs to have an estate plan. Commonly, the focus is on assets, taxes, and any changes to legislation, including state and federal tax laws, that may affect the security of your loved ones in the event of your incapacity or death. What many often forget, however, is that changes in family dynamics and circumstances can threaten even the most well thought-out estate plan. These hidden issues can easily keep your estate plan from working when it is truly needed. Below are several situations where updating an existing estate plan or creating a plan for the first time is necessary to protect your loved ones.
You are getting married: Marriage changes the structure of your family and will cause you to re-prioritize to whom you would like to leave your assets. It will also require you to add your new spouse as a beneficiary on retirement accounts and life insurance policies, as well as to update your personal inventory of assets resulting from the purchase, sale, or consolidation that typically occurs with a marriage. If you are changing your legal name, make sure to update all the relevant documents—including insurance policies, bank accounts, credit card companies, and property deeds.
You are getting remarried: In addition to the things to consider when you are getting married for the first time, a second marriage has the added concern about how to provide financial security for your new spouse while providing an inheritance for any children from a first marriage. This scenario can also affect the timing of how you want the inheritance to be distributed and the amount that is allocated to each member of your family. There are several tools that may be used—such as annuities, irrevocable life insurance trusts, or splitting your estate among the beneficiaries—to address your new family’s unique needs.
The birth or adoption of a child or children: Whether you are giving birth to or adopting a child, overseeing a minor’s life can be overwhelming. Make sure you have plans prepared in the event you are not around. This includes having a Will or Living Trust prepared to outline financial distributions and management of funds for the child(ren), deciding on a guardian and any other necessary fiduciaries, and ensuring that accounts and/or life insurance policies left for the children are properly accounted for.
Children reach the age of majority: When beneficiaries under your estate plan grow into adulthood, the manner in which you plan to transfer your assets will likely change. Special needs individuals, for example, may now be eligible for government assistance and the provisions of your existing plan may disqualify them from receiving those benefits in the future. Also, paying for higher education can be a focus as the children become adults. This may prompt changes in distribution amounts or requirements before the beneficiary can receive the money. Finally, the marriage of a child can have consequences on distributions to that child, especially as that child has children of his or her own.
Be comforted in knowing that there are no right or wrong answers when it comes to the estate plan for your family’s needs. What is key is to make sure you work with an experienced and knowledgeable estate planning professional to ensure that these issues are addressed so your true wishes are carried out when they are needed most. Give us a call today so we can discuss your concerns and craft the best plan to meet your unique family situation.