Estate plans are valuable and important. They protect your assets from taxes, allow you to have the final say in how your belongings and property are distributed, and, when done properly, go a long way towards protecting your loved ones during the difficult time after your death. But an estate plan is not a one-and-done situation. Estate updates are essential to keep up with, and while that may seem overwhelming, if you have a San Diego, CA estate planning attorney involved right from the beginning, your attorney can keep up with these updates so you can always have peace of mind.
How Often Do You Need Estate Updates?
Specific Times to Contact Your San Diego, CA Estate Planning Attorney to Talk About an Update
You Get Married or Divorced
Getting married or divorced legally changes your status when it comes to taxes and changes the status of your property. If you don’t have estate planning in place, much of your property will go to your spouse in the event of your death, and even with an estate plan in place, a spouse may be able to bring a challenge under the right circumstances and if things are not perfectly clear.
On the other hand, if you have married since making your estate plan but have made no provision for your spouse, if your estate plan is unclear or if it names someone who is now an ex-spouse, this could create a great deal of difficulty for your loved ones. One of the first things you should do once your marriage has been finalized is to contact your lawyer and update your will and other estate documents. The same holds once a divorce decree goes through: don’t wait too long to make sure that your estate documents are updated to reflect this change. This includes not just your will, but also any trusts where your ex-spouse might be named as a beneficiary or a trustee. You’ll also need to work out the details of any joint property.
Someone Else Passes Away
If a loved one or close friend dies, something to do once you have moved through the grief is to contact your lawyer and make sure your estate plan is updated if that person was involved in your estate plan in any way. This doesn’t just apply to beneficiaries, such as a child or spouse, but also to anyone who you named as executor or trustee or someone who might have been named as a guardian for a minor child in the event of your death. In addition, if a spouse or someone else close to you passes away and leaves some of their estate to you, you’ll want to update your estate plan to reflect this new asset, as well.
A New Child
Whether you are welcoming a new child through birth or by adoption, it’s important to adjust your estate plan not long after bringing this new one to your home. Your estate plan needs to clearly delineate how you want this child to inherit in the event of your death. For children under 18, it’s also important that you name a guardian in case you pass away. Even if you are married to the child’s other parent, you should still designate a guardian should the two of you both pass away at the same time, as, for example, in a car accident.
Adopted children are treated the same under the law as biological children if you die without a will in place, but if you have a will, update it specifically. You should also be aware that foster children and stepchildren that you have not actually adopted do not have any legal rights to your estate. The only way they will be able to inherit is if you specifically include them in your estate plan.
There’s a Big Change to the Estate
Whether you have taken a big hit in the stock market, lost property, sold or purchased a new home, inherited a fortune, or won the lottery, any change to the estate needs to be dealt with in your estate plan. Think through how your estate will be divided and what you want your beneficiaries to receive if there’s been a big loss. Certain distributions may no longer makes sense in this situation. For example, if you had originally left a large bequest to charity, but the estate value has now shrunk so much that this would mean there is very little left for your beneficiaries, it makes sense to change that bequest.
If your estate has grown a great deal, you now need to think about the possibly greater tax burden on your beneficiaries or on the estate itself. Not only should you update the documents, but you might need to establish a new trust or do some gifting or other wealth transfer planning to reduce the taxes your estate or heirs will have to pay.
The Laws Have Changed
Both state and federal estate tax laws change all the time, and it’s important to regularly connect with an estate planning attorney who keeps up with these changes and can make sure that your plan always makes the most of any protections that could benefit the estate or protect your beneficiaries from a ruinous tax burden. It’s unlikely that you will personally be aware of all these changes, but if you are working with a qualified lawyer right from the beginning, then you can be sure that your attorney will contact you if a change goes through that could affect you.
You Start or Sell a Business
A business is always especially complicated when it comes to tax liabilities and inheritance, so whatever you have in place already once you set up your original plan, don’t forget to consider how the plan will be impacted should you choose to sell your business, take on a partner, or otherwise make a major change. If you decide to start a business, this also needs to be factored into your estate planning. Depending on how the business is structured, you may need to coordinate all of this with your attorney and the other business owners (if any).
For help with your estate planning, including updating the plan if things have changed in your life, contact the law firm of Frisella Neilson, APC in San Diego right away.
