What Life Events Should Trigger an Estate Plan Review? (Published 11-2020)
You have an estate plan in place, so your property and family are protected, right? Not exactly. Sudden, and even planned, life events commonly result in a situation where your estate plan may not meet your intentions when you pass away. It is important to review your estate plan periodically, and, especially, after certain “trigger” events happen in your life.
Why is an Estate Plan Important?
A comprehensive estate plan is an essential part of protecting your assets and providing for future generations. It’s important to understand, however, that it’s not enough to simply create an estate plan and forget about it. Your estate plan needs to change and evolve over the years. Life changes, so your estate plan needs to change along with it.
What are some significant life events that should trigger a review of my estate plan?
Marriage can change every aspect of your life. It’s important to remember that marrying someone is as much a financial union as a personal one. Once you are married, most of the assets that you accumulate are both of yours, and your spouse is entitled to a percentage of your estate in the absence of other arrangements. If you have children from a previous relationship (or your spouse has children of his or her own), you need to account for that in your estate plan.
It is also important to review your plan after a divorce. State laws might prevent your ex-spouse from inheriting under a will or trust; but they still might be listed as a beneficiary on certain accounts, or as your power of attorney, so you want to update these documents. If you have a joint trust, you will need to review whether to revoke that trust and create a new one.
Birth of a Child
The birth of a child is another event that should trigger a review of your existing estate plan. Children are entitled to inherit under state law. However, many parents would like to ensure that their children receive more than they would under a statute. In addition, state law will not ensure that your children inherit trust property. Your trust documents will need to be updated to reflect how you want assets to be distributed to your children. Finally, you can use a last will and testament to name a preferred guardian. This is critical, should a tragedy occur, where both parents are unable to care for a child.
We can never predict the future. This is especially true right now, as we are all living through the COVID-19 Pandemic, and the future is uncertain in many ways. The worry of becoming physically ill with the virus, as well as the possibility that you or a loved one could become emotionally ill, weighs heavily on our minds. Once you are in the hospital, or under psychological care, you may not have the opportunity to update your estate plan or ensure you have the right power of attorney, and that your wishes are met.
For these varied reasons, it is a good time to review your estate plan and make sure it is updated. Most estate planning attorneys are working remotely to help people create and review estate plans, so you can rest assured that you and your family will be protected.
.Matthew V. Piwowar is a Grand Rapids estate planning attorney. Mr. Piwowar is a member of the State Bar of Michigan, and the State Bar Probate & Estate Planning Section, the National Network of Estate Planning Attorneys, and the Michigan Forum of Estate Planners.