If you're like most people, you might have put your estate plan together and thought you wouldn't have to look at it again. If it shocks you to hear that you are wrong, we're glad – only because updating your estate plan is one of the most important things you can do to ensure your family remains protected as your life changes.
Think about what it would be like if you never made repairs to your car or home after buying it: your car will eventually leave you stranded, and your roof may fall on your head, or you may face a fire or a flood due to neglected electric or plumbing systems.
The point is that you don't think about “maintenance” for these things as an option – it is a necessity. In fact, maintenance is what gets you the most mileage out of your car and the most equity in your home – so why are you still thinking that maintaining your estate plan is an option?
After all, your estate plan is the LEGAL HOME for your property.
Why You Should Update Your Estate Plan
Updating your estate plan is important for a variety of reasons. Below, we'll take a look at some of the key reasons and explain how they could be relevant to your life.
Your Family Has Changed
The way your family looks right now will probably change over time. You might get married (or divorced), might have children (or grandchildren), and may have to confront deaths in your family, and have received an inheritance. Each of these events represents a change of circumstances that resonates with your estate plan.
Each time one of these events occurs is a reason to review your entire estate plan. Why? Because you might be leaving an ex-spouse in charge of your end-of-life care -or you could be missing out on an opportunity to ensure your children and spouse benefit from as much of your wealth as possible. In any case, a change in your family necessitates that you realign your estate plan accordingly, and have it “make sense” with the way things are now.
Your Assets & Liabilities Have Significantly Changed
If your financial life looks radically different now than it did when you first set up your estate plan, it's time for an update. Whether you've built up a considerable amount of wealth or are dealing with business losses, divorce, or creditors, you should reconsider who will be in charge of your estate and what distributions from your trust would look like. If you are particularly concerned about your creditors invading your property that should go to your loved ones, you can plan around this possibility to protect those you love by including “spendthrift” provisions in your trust. If beneficiaries develop special needs or substance abuse dependence, the trust can be revised accordingly to shield assets in a Special Needs Trust and “protect beneficiaries from themselves.” Do you own cryptocurrency or other digital assets? If so – your Trust, Will, and Power of Attorney should include provisions concerning the management of digital assets. There is even an option to appoint a Special Trustee to specifically manage digital assets, separate from the Trustee who is charged with managing everything else. If you bank with completely different banks now than when you first set up your Trust, this information should be updated on the Schedule of Trust Assets in your Trust document. Did you register a Corporation or an LLC? Did you buy into a Partnership? If so – it is prudent to assign such business ownership to your Trust. These are just a few examples of why your trust should be reviewed to ensure it actually reflects changes in your assets over time.
Your Executor or Trustee Selections Become Inappropriate
The people you assign to handle your affairs now can become inappropriate selections over time also. This is especially true if they die, relocate, divorce, or become cognitively impaired by the time they are called to manage your affairs. You might also see a different side of someone over the years that calls into question whether they are still trustworthy to manage your property. Do your named beneficiaries “get along” with your named Trustee or Executor? Or would this nomination be a source of ongoing conflicts between them?
It is therefore prudent to carve out some time every year to review who you still want to manage your estate and carry out your last wishes. Naming the right people in the right positions makes all the difference for you and your desired beneficiaries.
Did you move to California from another state?
While moving to California from another state will not invalidate your will or trust, there can be some important considerations under California law for your Power of Attorney, Health Directive, and even your Will or Trust that may or may not have been considered in the state where your documents were first created. California's nuances should be discussed and possibly implemented in your documents, so you can take full advantage of the laws of your new state of residency. This is especially true for your Power of Attorney and Health Directive.
Does Your Estate Plan Need an Update?
If you want to be sure that your estate plan is always as effective as possible, and conforms to the changed circumstances and changes in the law over the years, you can count on the Law Offices of Maria N. Jonsson, PC to address your questions and concerns.
We can help you review every aspect of your estate plan to ensure that it properly addresses the current makeup of your family and property. If you are a new resident of California, we can help review your estate plan to ensure that the protections you created in your former state of residence still apply here, as well as include protections under California law that were not contemplated in the state where your documents were created.