7 Times You Should Update Your Will or Estate Plan
Having your estate plan completed is such a relief! You’ve crossed a big item off your to-do list. But estate planning is not a one-and-done thing. It’s a lifelong process. And while having it “done” is a major accomplishment worthy of celebration, it’s important to review your plan annually. That way if changes are needed, they can be addressed. Let’s walk through 7 times you should update your will or estate plan.
Keep in mind that changing your estate plan does not affect any beneficiary designations you have made to any existing accounts, insurance policies, etc.
Let’s go over seven major reasons you should absolutely update your will and estate plan.
1. Marriage
If you get married after your estate plan is complete, you need to change your estate plan to reflect your wishes for the distribution of your estate upon your death. If you don’t, even if you purposefully choose not to change anything, the Court will assume you forgot to change your estate plan and proceed as if you did change it– awarding no less than one-third (1/3) of your estate to your spouse. This may be exactly what you want to happen, or maybe it’s not. This is why it’s important to change your estate plan after marriage.
Additionally, prior to marriage, considering a prenuptial agreement is another excellent estate planning tool. We dive into that more here.
2. Divorce
Likewise, if you divorce it’s important to update your estate plan. In the event of a divorce, just like in the event of a marriage, the Court makes some assumptions. In this case the Court assumes you don’t want anything to do with your ex-spouse, so they are completely cut out of any distributions. While this is likely in most cases, there may be a reason why you’d want to leave items or assets to your ex-spouse. Every circumstance is different and should be given proper attention to make sure your actual wishes are met– not allowing the Court to assume anything on your behalf.
Keep in mind that even if you change your estate plan, if you don’t update your beneficiary designations those assets will be distributed as the beneficiary designations state. So, if your ex-spouse is the designated beneficiary to your life insurance policy or retirement accounts and you don’t change them, no assumptions will be made by the Court or otherwise– the funds will still go to whomever is listed as a beneficiary.
3. Birth of 1st Child
I’m sure you’re thinking, “I have a newborn, and I’m running on fumes, and you want me to update my estate plan?!” We know. Babies are beautiful, wonderful, exhausting adventures. And we also know that now that you’re a parent you want to do everything you can to look out for your child.
Just like marriage and divorce, the Court makes some assumptions when a child enters your world. In this instance, the Court will assume you would want your child to get a share of your estate at your death, and this is likely true, but you should have the power to determine that share and how it’s distributed. Updating your estate plan at the birth of your first child allows you to make those wishes crystal clear for the Court.
Additionally, your estate planning documents are where you name the guardian of your child should something happen to you. You definitely don’t want the Court making that decision for you.
4. Subsequent Children
This one is more of a maybe situation. You may not need to update your estate plan if you updated it at the birth of your first child. But you absolutely need to review your estate plan to check and make sure wording is correct. Your previous estate plan may list only one child and if so, the Court will assume you mean to include all children in your asset distribution. Again, we don’t like the Court making assumptions for you, but it may be okay in this case.
However, it may not be okay. Maybe some of your children are very responsible, but one has substance addiction or gambling issues. It may not be safe for them to receive whatever portion of your estate the Court would assume you want them to have. By updating your estate plan to account for the unique needs of each child, you can put in proper safeguards, so their inheritance is a blessing and not a curse.
5. Changes in Relationship With Important People
Life happens. Relationships change. People are born. People die. Anytime there is a major change to the relationships with the important people named in your estate plan, you need to update your plan. Don’t leave it to chance. Again, we never like the Court making assumptions on your behalf.
A good example of this would be the Executor or Trustee of your estate plan. If they have moved away, become incapacitated, or estranged, are you happy with the person you named as backup? Did you even name a backup? It’s important to trust these key people to follow your wishes. Leaving it to the Court to decide who these people are may not serve your estate best.
6. Death of Anyone in Your Plan
Similar to the reasons outlined in #5, it’s important to review and make changes to your estate plan if anyone in the plan predeceases you.
If a beneficiary dies, you need to make sure you are happy with the way your plan outlines the distribution of the asset(s). For instance, is your plan written in a way where their descendants receive their share (per stirpes)? Or is their share lumped back in and distributed to your remaining living beneficiaries (per capita)? Or do you have an alternate beneficiary named? Make sure you’re happy with what will happen to their share now that they’ve passed away. The Court will not make assumptions about this. They will follow the directions you outlined for this beneficiary. Those directions may no longer reflect your true wishes.
Likewise, if anyone else named in your estate plan (trustee, executor, guardian, agent) has died, look closely at your alternates, called successors. If there aren’t any, or if you’re unhappy with those selections, update the plan.
7. Creating a Blended Family
Creating a blended family can be a truly beautiful and wonderful thing. It is also not simple. And the laws about heirs and beneficiaries do not account for the familial bonds and love that can be shared in these families.
It’s important to really think and consider who gets what and under what circumstances do they get those things/assets.
Every blended family is different. Some form when the children are very young. Others happen later in life when the children are adults and have their own children. Some blended families include “yours, mine, and ours” children. While others do not. Each family is unique and that is why it’s so important to update your estate plan when a blended family is created.
The State does not recognize stepchildren as heirs and will not consider them if you haven’t specifically named them within your plan. In some cases, this is exactly how your blended family wants everything to be. But others consider their stepchildren to be their heirs and want them to receive a portion of their estate. This is why it’s so important to update your estate plan when you create a blended family.
As you can see, there are lots of reasons to update your will or estate plan.
Estate planning is a lifelong process. Don’t be discouraged! Each update is usually easier and simpler than the last. Especially when you partner with a skilled team to help you achieve your wishes.
As Siedentopf Law we recommend reviewing your estate plan and making any changes annually. We are here to make this yearly review and update as painless as possible. Even if we didn’t draft your original documents, we are here to help. Call us at (404) 736-6066 or visit our website to schedule a consultation.
