When to Update Your Estate Plan: 4 Key Life Changes

Nearly everyone needs to have an estate plan in place. Commonly, the focus is on assets, taxes and changes to legislation that may affect the security of your loved ones in the event of your incapacity or death.

What many people forget, however, is that changes in family dynamics and circumstances can affect even a carefully prepared estate plan. These changes can keep your plan from working as intended when your family needs it most.

Knowing when to update your estate plan can help you keep your wishes current and protect the people you love. Below are several situations where updating an existing estate plan, or creating one for the first time, may be necessary.

When Should You Update Your Estate Plan?

Major changes in your family or financial circumstances are good reasons to review your estate plan. Some of the most important situations include:

• Children reaching adulthood
• Getting married for the first time
• Getting remarried
• The birth or adoption of a child

These events can affect who you want to inherit your assets, who should make decisions for you if you become incapacitated and how you want to provide for your loved ones.

1. Your Children Reach the Age of Majority

When beneficiaries under your estate plan grow into adulthood, the way you plan to transfer your assets may change.

For example, a beneficiary who previously needed a trust or other restrictions because they were a minor may have different needs as an adult. A beneficiary with special needs may also require careful planning so that an inheritance does not unintentionally affect eligibility for certain government benefits.

Education may also become a priority as your children become adults. You may want to reconsider how and when assets are distributed or whether certain conditions should apply before a beneficiary receives money.

These changes are a good reason to review your wills and trusts and make sure they still reflect your family’s needs.

2. You Are Getting Married for the First Time

Marriage changes the structure of your family and may cause you to reconsider who you want to benefit from your estate.

Getting married may also require you to review beneficiary designations on retirement accounts and life insurance policies. These designations can play an important role in determining who receives certain assets or benefits.

You should also review your inventory of assets. Marriage can involve the purchase, sale or consolidation of property and other financial accounts.

If you are changing your legal name, make sure you update relevant records and accounts. These may include insurance policies, bank accounts, credit card accounts and property records.

3. You Are Getting Remarried

Remarriage creates additional estate planning considerations, particularly when you have children from a previous marriage or relationship.

You may want to provide financial security for your new spouse while also preserving an inheritance for your children. This can affect both the amount each person receives and when they receive it.

There are several estate planning tools that may help address the needs of a blended family. Depending on your circumstances, these may include trusts, life insurance and other strategies for dividing or managing your estate.

The right approach depends on your family structure, assets and goals. An estate planning professional can help you consider the available options and determine which approach is appropriate for your circumstances.

4. You Have a Child or Adopt a Child

Whether you give birth to or adopt a child, welcoming a new child into your family is an important reason to review your estate plan.

Having a plan in place can help you address what should happen if you are no longer able to care for your child. This may include:

• Creating or updating a will or trust
• Choosing a guardian for a minor child
• Choosing appropriate fiduciaries to manage assets or make decisions
• Providing instructions for financial distributions
• Reviewing accounts and life insurance policies intended to benefit your child
• Reviewing beneficiary designations to make sure they align with your overall plan

A comprehensive estate plan can help ensure these decisions are addressed before an emergency occurs.

Other Reasons to Review Your Estate Plan

The family changes above are not the only reasons to review an estate plan. You should also consider a review when your financial or personal circumstances change significantly.

• You acquire or sell significant assets.
• You experience a divorce or separation.
• A beneficiary or fiduciary dies or becomes unable to serve.
• You move to another state.
• Your business ownership changes.
• Your wishes for your beneficiaries change.
• Your circumstances change in a way that affects your incapacity planning.

Even when nothing major has changed, periodically reviewing your plan can help identify outdated documents, beneficiary designations or other provisions.

Estate Plan Review Checklist

When reviewing your estate plan, consider whether the following still reflect your wishes:

Bottom Line

There are no universal right or wrong answers when it comes to creating an estate plan for your family’s needs. What matters is making sure your plan reflects your current circumstances, wishes and goals.

Life changes can create silent threats to an estate plan that once worked well. Marriage, remarriage, having or adopting a child and children reaching adulthood can all be reasons to review your plan.

Working with an experienced estate planning professional can help you identify changes that may affect your plan and determine whether your documents, beneficiary designations and other arrangements still work together.

Have your family circumstances changed? Contact Littleton Legal to discuss your estate planning needs and create or update a plan designed around your family’s unique situation.