Readers may know that an estate plan should be updated after significant life events. Yet what types of events qualify as significant?
Perhaps the obvious example is having children. A couple might have an estate plan in place that names the other spouse as a beneficiary. In the event of both parents’ passing or incapacity, however, an estate plan should name a guardian to care for any minor children.
Regarding incapacity planning, even a single individual should have an estate plan that includes a medical power of attorney, a living will, an advance health care directive and/or other documents that describe the medical care he or she would approve or decline in the event decision-making is rendered impossible by an illness or disability.
Another contingency warranting additional planning is the potential illness, disability or death of a beneficiary or trustee. An asset without a named beneficiary may have to go through probate. To avoid that cost and delay, a beneficiary might be able to name a successor beneficiary. If that’s not possible, instruments such as a pour-over will can specify that any property remaining in an estate at the time of the individual’s death shall be transferred to a trust.
Divorce and remarriage are additional examples of life events warranting an update to one’s estate plan. When a parent passes, his or her surviving spouse and children typically share in the estate. With remarriage, however, estate assets may not automatically pass to stepchildren. The estate documents may have to specifically name them, and describe how assets will be divided among them and any children from a previous marriage.
Source: Huffington Post, “9 Life Changes That Require An Estate Plan Review,” Steve Cook, Aug. 15, 2016