When should you review your will (and trust)?
I congratulate clients who see me and complete the estate planning process. Talking about death, taxes and disability is not an activity most people put on their list of “fun things to do.” My clients must think hard about possible sad events in life, such as “who should my children live with if my spouse and I die an untimely death?” or “who do I trust with my life savings?”.
I tell people when they are done that they’ve taken care of a very important task for themselves and their family but unfortunately, I can’t tell them they don’t have to think about it anymore. Events happen and life changes. I generally tell folks that if life proceeds without much incident to review their estate documents at least every three to five years and also to keep an eye on the news. Has Congress or the state legislature passed any law which may affect their estates? Additionally, there are some events that necessitate taking out the documents from the safe place you are keeping them and looking them over. Here are a few.
You move to another state. Although federal tax laws have the greater impact on a person’s estate in most cases, the law which governs estates is the law of a person’s home state. Have your documents looked over by an attorney in the state you move into.
You purchase property in another state. The estates of many Virginians are adequately addressed by what I call a “simple will package,” that consists of a will, power of attorney document, and an advance medical directive with the appointment of a health care agent especially if most property or assets are held jointly or have beneficiary designations. For simple estates, probate in Virginia is not burdensome. I can make no such representations about the probate process or the law of inheritance in other states. You may want to establish a trust to avoid probate in another state.
Your Spouse dies. At this sad event, thinking about your will or trust is, what I would venture to say, not on your mind. When your grief clears a little, however, you have to wake up to the reality that your life has changed dramatically. Your spouse was probably a major part of your estate plan. You are now a single person, perhaps with children.
You divorce. Similar thoughts as the sad event above, but there may be payment obligations stemming from this divorce which also affects your estate plan. You also should examine the effect of the divorce upon your children’s inheritance. Additionally, if you have a child who divorces, examine where your child’s inheritance could go. Is it safe from your child’s obligations?
You remarry. Now you may have a blended family, children from two marriages. You want to make sure your estate documents are still effective under the new circumstances. You may wish to consider a trust for your children or grandchildren in the event of a remarriage. Your children may not be included in your estate should you remarry and predecease your new spouse. Speaking of marriage, if your spouse is a non citizen, they are treated differently under the U.S. tax law. It may be necessary with special tax planning to transfer property to a non citizen spouse during your life or upon your death. Your child marries. If your child or other beneficiary should marry, this may also require changes in your estate. What effect does the new member of the family have on your estate?
You come into a lot of money or you suffer a financial set back. Either way, your financial world is a different place.
You enter into a new business. I first got into estate planning as a business attorney. Succession planning or plans for the unexpected are as important as any other parts of the business plan.What? You don’t have a business plan? You are walking in the jungle my friend without a map or a compass but that is the subject of another article.
You become a parent or grand parent. For parents of minor children, do you have a guardian chosen and named in your will? In your situation a trust may benefit the child or grandchild.
An immediate family member becomes disabled or contracts a disabling disease. Special needs such as disability or illness or other infirmity, will likely require planning to meet that family member’s needs without claims from creditors. Public assistance is also available with special planning.
The death of a significant person in your estate plan. The death of a family member or executor, guardian, or a trustee will also require changes in your estate plan. If you think of your estate plan as a chess board with pieces in place to effectively manage your estate and significant pieces are gone, you will need to add pieces.
Life does happen and I know how busy it gets. Life’s highways become smoother if time is periodically taken for reflection and planning.