So, you have been to see an attorney, you create a comprehensive estate plan, you are done, right? Just like many aspects of your life, your estate planning is subject to change for a variety of reasons. Our firm recommends that you sit down and review your entire estate plan on an annual basis, but the time of year is up to you. Whether it is April (tax season) or December, sitting down to review decision-makers and beneficiaries you have named in your documents is a good habit to fall in to. Below are some examples that may result in the need to update your documents. Some events would require your decision to make a change and others would be something that an attorney would determine whether changes are required.
There are numerous life-changing situations that may result in the need to update your documents. Many of these involve your ever-changing family: did you get married or divorced; did one of your children get married or divorced; did you become a parent or grandparent for the first time or the third time; or did you lose a parent, child or spouse?
Planning becomes particularly important when you have recently gotten divorced or married, especially in a second marriage situation where you want to provide for your new spouse and children from your previous marriage. Reviewing your documents may also remind you to take a look at the beneficiary designations you have on your life insurance, annuities or retirement accounts. If a beneficiary is not changed before you pass away, your ex-spouse may end up receiving funds from your life insurance simply because you neglected to update the beneficiary.
As a new parent, one item on your checklist should be putting a Will in place to create a trust for your child in the event that both parents pass away. In addition, you will want to nominate guardians for your minor children in the event that both parents pass away.
An individual who has just lost a loved one should review his or her documents to determine if the loved one is a decision-maker and/or beneficiary. In the event that such deceased person is a decision maker, who is his or her alternate and is that alternate person able and willing to serve? Also, are the alternate beneficiaries who you want them to be? Again, it is also important to review and update your beneficiary designations when a loved one passes away. Often times, if there is no back-up beneficiary named on your life insurance, annuities or retirement accounts then that asset must go through the probate process to be distributed to the beneficiaries of your Will.
Did you win the lottery or inherit a substantial amount? Another trigger for an estate plan review involves a change in your assets. In the event that your net worth has dramatically increased or decreased, your plan should be reviewed by an attorney to determine whether you need more planning to avoid paying estate taxes or whether your plan can be simplified if the tax planning you have is unnecessary.
Did you move? Even if you relocated to another state from Florida, your Florida Will may be “probated” as a valid document as long as it was executed in conformity with the laws of the State of Florida. However, the tax laws in your new state of residence may be different from Florida, so it is important that you see an attorney licensed in the new state to make sure your documents are appropriate. Have you moved to Florida from another state? We recommend that you sit down with a Florida attorney to have your documents reviewed.
Another major event that happens every few years are changes in the tax laws. Again, this is something that your attorney should inform you about if changes will adversely effect your existing plan. However, if you haven’t looked at your documents in over ten years, it is a good idea to sit down with an attorney because there have been significant changes in the tax laws, namely the federal estate tax exemption in the last five years, that may affect you.
If one of the above events has recently happened to you and your family and you want to make a change to your existing plan or if you have questions about documents from another state or your tax liability, please give our office a call to schedule a consultation.