Now that we are well into the New Year, have you visited your estate plan lately? Now is a good time to do so. Why? When executed properly, an up-to-date estate plan can protect you and your family from unexpected consequences arising from life events such as sickness, accident, or an untimely death. With advanced planning and the help of an expert, your family can potentially avoid expending money on legal battles and ensure that your wishes are followed by your next of kin.
If you already have an estate plan in place, it’s crucial to revisit it on a regular basis. Federal and state law changes may have affected your plan, as can major life changes events (i.e., divorce, death, or change in assets). An out-of-date estate plan could cost your loved ones unnecessary tax burdens or administrative costs, and may not comport with your current decisions regarding heirship.
To get started, review our estate planning checklist:
Has Your Family or Marital Status Changed?
If there have been major changes in your family, such as a marriage, birth of children, or a divorce, you may need an estate planning checkup.
Marriage. In Colorado, a premarital will may cause hardship on heirs or a second spouse if the will does not comport with current expectations of family regarding your wishes for your estate. Updating your plan after marriage is critical for all heirs to understand your desires after your death.
Children and/or Blended Families. You may be adding new members to your immediate family, or perhaps you have welcomed a new grandchild or stepchild into the fold who you would like to include in your will. When you add children to your immediate family, you will want to make sure to name guardians for them and/or set up a trust to manage their inheritance until they reach a certain age. Further, if you have a blended family, ensuring your will or trust names your children and stepchildren, even if only to define them but not include them in the dispositions, may ensure that your desires for heirship are clear.
Divorce. Typically, your will leaves everything to your spouse, and your spouse is also the beneficiary on insurance policies and financial accounts. While this is usually revoked by state law upon a divorce, the better practice is to execute a new estate plan and change your beneficiary designations to comport with your new life situation.
Powers of Attorney. It is always a good idea to routinely review and update your healthcare designations and medical/financial powers of attorney after divorce or any other life event.
Who Is Named in Your Estate Planning Documents?
Your current estate plan may assign roles such as power of attorney and executor to people who are unable to carry out those duties for various reasons, including disability or death. Make sure the people you’ve named can still serve and are willing to do so.
In addition, review the beneficiary designations for your life insurance policies, pensions, and retirement accounts and/or any transfer-on-death accounts. Update them if necessary.
Did You Start a New Business?
If you don’t have a succession plan for your small business, you could be leaving it in a tumultuous, chaotic situation for your business partner(s) and/or loved ones. Consider buy-sell agreements with partners, life insurance, and perhaps succession planning for children or other family members to take over the upon your disability or death.
Have Your Assets Changed?
You may now own more property, have more money, or have experienced other substantial changes in your wealth. As your wealth grows, you could benefit from setting up proper estate-planning vehicles such as a will or trust. Property planning may help with managing estate taxes, avoiding or minimizing probate, providing for loved ones, and planning for long-term care.
How Old Is Your Estate Plan?
Are your estate plan goals the same now as they were when you were younger? Priorities often change as we age, particularly those involving long-term healthcare, for example.
Tax law and estate planning laws may also have changed over the years. Review your plan with an estate planning professional regularly, at least every five years or upon any major life event, such as a marriage, birth, or death of a loved one.
You may have changed your mind about who you want to provide for as life evolves. Make sure your estate plan reflects your current wishes regarding beneficiaries, as well as who you want to serve as power of attorney, executor, or trustee.
Have You Moved to a New State?
If you’ve moved to a new state since you prepared your estate plan, your will, powers of attorney, trust, and living will are likely still valid. However, your new state could have different laws regarding probate and estate taxes to consider. Another thing to consider: Are the people who you’ve named as power of attorney or executor able to fill these roles now that you’ve changed your location, or are they now living far away from you?
In our busy lives, you may not have paused to think about your estate plan and how things may have changed as life goes on. There’s no time like the present to revisit that plan and update it accordingly. Hurth, Sisk and Blakemore can help take the stress and worry out of updating your estate plan. Contact us today for a consultation and get started today!