Quick Checklist: Life Events Affecting Your Estate Planning

Let’s say you’ve found the love of your life and want to protect them.

Or have you had a baby or adopted a child? 

Or are you going through a divorce with the former love of your life? 

Or you came into a whole lot of cash or other assets?

These are all occasions when you want to review and update your will and estate planning. While the reasons may be endless, we’ve listed a few more possible life changes and scenarios that may prompt you to change your estate plan.

___ Change in marital status

___ New children or adult children

___ Changes in beneficiary relationships

___ Death of a beneficiary or fiduciary

___ Changes in your financial situation

___ Opening or closing a business venture

___ Change in asset value

___ Moving to another state

___ Changes in tax law

___ Changes in state law

___ Other considerations

Reasons To Update Your Will

Change in Marital Status

If you have married or entered into a domestic partnership, it is time to make revisions to your will. If you are not married and would like to add your loved one to your will, it is essential to do this as soon as possible, because if you die without a will, your partner is not entitled to inherit any of your belongings. Check community property laws in your state for more information on property division between married or divorced couples.

Updating beneficiary designations to your policies and accounts upon marriage is also important. Such policies and accounts include your life insurance, bank, brokerage, and retirement accounts. Additionally, remember to remove your ex-spouse as a beneficiary if you so desire.

New Children or Adult Children

It is time to update your will if you have new children or grandchildren, either by birth or adoption. Especially if you have new stepchildren or step-grandchildren, you should name them in your will because they won’t inherit otherwise. As your children grow and your family dynamics change, you may want to revise certain provisions. For example,

Guardianship for Minor Children

When your kids were young, you designated a guardian for them. But what if your oldest child is now 25 years old, and you think they are an appropriate guardian for your 17-year-old? Or what if your relationship with your name guardians changed, and you feel someone else is better suited to care for your children? You may change the guardians in your will.

Age of Inheritance

When your child or grandchild turns 18, it may be good to revisit your will. You can update any conditions on inheriting your assets, such as entering college or a specific age. Suppose your grandson dropped out of college because he became a successful web designer. You may change the provision that blocks him from an inheritance conditioned on a college degree. Or you might alter your distribution method so they will inherit when they are older.

Changes in Beneficiary Relationships

Family dynamics can be complicated. You may no longer want a named beneficiary to inherit. Or situations change; for example, your original will may split your assets among your son and daughter. But what if your daughter was a doctor or lawyer in a better economic situation than your son? You can change the distribution of your estate to be more equitable.

Note, however, if you intend to exclude a child (minor or adult) from receiving any inheritance, you must explicitly state it in your will. Simply omitting their name is not enough. A probate court may assume the exclusion was unintentional.

Death of a Beneficiary or Fiduciary

The death of a loved one or family member can heavily impact your estate plan, especially if the individual is a beneficiary, executor, power of attorney, guardian, or trustee.

If a beneficiary of an account or policy (for example, a bank account) dies before you, the asset returns to your estate. Or if you leave a gift in a will and the beneficiary dies, you may want that gift to go to someone else. One way around this is to update your beneficiaries and assign a secondary (or “contingent”) beneficiary.

Similarly, if your choice of fiduciary (such as a personal representative, guardian, trustee, or agent for financial or medical power attorney) dies, you will want to replace them with another.

Changes in Your Financial Situation

You may have just started a new business or retired from your career. Or your investments have rocketed, and your IRA is flush (congratulations!). Any changes to your financial assets have implications for your beneficiaries that you can address in your will.

Opening or Closing a Business Venture

Your personal interest in a business, whether or not it is your own company, will also be inherited. You can gift your entire company through your will, and even include instructions on managing the business after your death. Providing clear directions will help the business run with minimal interruption.

Change In Asset Value

Some assets, such as stocks, can fluctuate wildly in value. Depending on your estate plan, this could mean your children receive unequal gifts, or your charity of choice receives nothing. Keep track of market changes to ensure you gift your possessions as you intended.

Stocks and accounts are not your only financial assets; remember to consider newly acquired or disposed of assets. Real estate, inheritances, and other personal property (such as jewelry) are also valuable assets. Consider creating a revocable living trust to pass these assets forward, which can help your loved ones avoid lengthy probate proceedings and ease their estate tax burden.

The value of your estate helps determine taxes, allocation, probate method, and the basis for future sales, so make sure your will reflects the most recent valuation of your assets.

Moving to Another State

Moving to a new home is a common reason to make revisions to your will. Since descriptions of real estate, either by coordinates or the street address, are in your will, you should update the information to reflect your current situation.

Are you moving to a new state? Different states have different requirements for recognizing the validity of a will. Some states, for example, require two witness signatures, while others require only one. Others may not accept a handwritten will. Check your new state’s laws to make sure your will is legally compliant.

Did you downsize? Review your will and omit items you no longer own. If you do not, the person set to inherit the old possession will not receive anything in its place.

Your living will, advanced health care directive, and healthcare power of attorney may also need to be updated depending on differences in state law.

Changes in Tax Law

When tax laws change, it may affect your estate. The SECURE Act of 2019 changed who is eligible to contribute to retirement accounts and when people must withdraw. The new age for taking required minimum distributions is 72 and applies to IRAs, 401(k)s, and other qualified retirement plans.

Note: The SECURE Act law took effect on January 1, 2020. Before then, minimum distributions began at 70 ½. That means if you reached the age of 70 ½ before January 1, 2020, you had to start taking minimum distributions when you turned 70 ½.

Changes In State Law

Have new laws passed in your state? You need to periodically check to see whether your state has enacted new laws that impact your estate planning documents. State tax laws, particularly estate tax laws, affect your asset distribution. Various state and federal laws levy taxes on large estates and gifts, and several states collect an inheritance tax. If you have a large estate and have concerns about estate taxes, consult an estate law or tax attorney.

Other Considerations

Are you planning to move to a long-term care facility? Do you have serious health concerns or a terminal illness that requires you to reevaluate your desired end-of-life care? Perhaps you would like to change your durable power of attorney. Major life events look different for everybody, and there are many common reasons to update your will or other legal documents.

How Do I Update My Estate Planning Documents?

You can consult an estate planning attorney to update your documents. However, there are also online estate planning tools to help you get your estate planning in order:

• Last Will and Testament Forms
• Health Care Directive & Living Will Forms
• Financial Power of Attorney Forms

If there is a life event or other significant change, reviewing your estate planning is a good idea for peace of mind knowing your loved ones are protected.