Life Changes That May Require an Estate Plan Update
Once you create an estate plan, treating it as a finished document that never needs revisions can be tempting, but that shouldn’t be the case. Failing to modify your estate plan as your personal, family, and financial circumstances change can result in unwanted legal surprises and disappointments later. In addition, changes to laws and regulations may invalidate portions of your estate plan or increase your tax liabilities.
For these reasons, you should review and update your estate plan regularly or when you experience a significant life change to ensure that it reflects your current situation and your wishes, goals, or needs. The law firm of Brown & Hobkirk, PLLC can help. Contact us for a consultation with an experienced estate planning attorney in Arizona.
Major Life Events Triggering an Estate Plan Update
Significant life events or changes that should encourage you to review and potentially update your estate plan include:
Marriage or Divorce
When you get married, you may want to create or update your estate plan to reflect your relationship with your spouse. For example, many couples draft “sweetheart wills,” leaving their entire estate and assets to their spouse upon death.
Divorcing couples should also make updating an estate plan essential. Although Arizona law disqualifies a person from automatically becoming a beneficiary of their ex-spouse’s estate following divorce, having an ex-spouse named in estate planning documents, including trusts, powers of attorney, or beneficiary designations, can lead to confusion and family disputes.
Birth or Adoption of a Child
The birth of children, grandchildren, or adopting a child may require you to update your estate plan to adjust or add inheritances. You might also establish trusts to secure money for your child’s education or expenses when they become young adults. It’s also wise to update your estate plan to nominate someone to serve as guardian for minor children if you and your children’s other parent both pass away.
Death of a Loved One
If a loved one you designated as a beneficiary in your estate plan passes away, you should review your estate plan to evaluate how you want to redistribute your assets to remaining heirs and family members. Otherwise, administering your estate may become more complex. You may also need to replace a deceased loved one if they were your estate’s personal representative (executor) or acted as a trustee of a trust you created.
Financial Changes
Various financial changes should encourage you to update your estate plan, including substantial increases in income or earning capacity, growth in the value of investments, successfully launching and growing a business, loss of assets you’ve bequeathed explicitly in your estate plan, receiving an inheritance, purchasing a home, or winning the lottery. After experiencing significant financial changes, ask an estate planning attorney to ensure you made the bequests you intended to make.
Changes in Residency
When you move to another state, you should review your estate plan to ensure it complies with your new state’s laws. Checking your will, powers of attorney, or other estate documents for compliance with state law can help avoid complications in executing your estate plan. You can also take advantage of tax benefits or avoid tax liabilities created by your new state’s laws.
Health-Related Considerations
Experiencing health problems should motivate you to review and update your estate plan. For example, you may want to execute a durable power of attorney or a healthcare proxy to give a trusted family member the ability to make decisions on your behalf or handle your medical, financial, personal, and legal affairs if you become incapacitated. If you are terminally ill, consider reviewing your estate plan as soon as possible to ensure it still reflects your current preferences.
Changes in Designated Beneficiaries
You should update your estate plan when you want to change designated beneficiaries or specific bequests of property or money. For example, if you have a falling out with a relative you previously named as a beneficiary in a will or trust, you may want to remove them from your estate plan. Conversely, if you gain new family members through birth or marriage or grow closer to different family members, you may want to include them in your estate plan. You may also want to make or change beneficiary or pay/transfer-on-death designations for bank accounts, retirement accounts, or insurance plans to pass those assets directly to loved ones rather than probating those assets during estate administration.
Changes in Guardianship Wishes
You should update your estate plan if you need to change the person you named as guardian for your children. For example, a designated guardian may experience health or personal issues that make them unsuited for the role, such as becoming disabled or struggling with addiction. You can make changes in your estate plan to designate a new guardian so your children get the best possible care.
Legal and Regulatory Updates
New and amended laws can impact the effectiveness of your estate plan. Changes in trusts and estate laws may give you new estate planning options or invalidate portions of your estate plan. Changes in tax laws may also require you to update your estate plan to avoid tax liabilities or take advantage of tax benefits.
Contact an Arizona Estate Planning Attorney to Review Your Plan After Major Life Changes
When you’ve experienced significant life changes, reviewing your estate plan can ensure that it reflects your evolving needs, goals, and wishes. The Arizona estate planning attorneys at Brown & Hobkirk, PLLC have assisted clients through the estate planning process for over 20 years. We provide individualized legal advice and solutions to meet our clients’ ever-changing needs. Contact us today for a free consultation with our Arizona estate planning attorneys or a review of your current estate plan.