Tuesday, November 22, 2016
Estate Planning | Don't Delay, Plan Today... To Keep Your Estate in Order
Summary: Whether it is your marriage, your health, your car, your home, your boat or your estate plan, all of these have some things in common. One of them is that all of the hard work you put into acquiring and building these things up end up being lost if you allow them to fall into disrepair due to neglect. With regard to your estate plan, one of the best ways to avoid this state of disrepair is through regular maintenance. By resisting the urge to put off periodic estate plan reviews, you be certain that you have a plan best suited to carry out your wishes and your goals, and reflect both the state of personal affairs in your life and the state of the laws where you live.
When it comes to estate planning, it can be easy to procrastinate. There are dozens of different reasons people put off getting an estate plan in place. For those that clear this hurdle and get a complete plan put together and executed, this is not the end of the process. Many people know that they need to be pro-active in ensuring that their plan remains up-to-date. However, just like making an initial estate plan, maintaining an estate plan can be easy to put off. And just as with initial estate planning, it is imperative not to fall into this procrastination trap.
Procrastinating the completion of your estate plan maintenance essentially creates a minefield of possible harms that can blow up all the careful planning you've done. One of these mines is a change in your personal situation. Life events that can cause this include divorce, marriage, a birth or a death, among others. A man in Virginia ended up leaving his ex-wife (instead of his current wife) a $124,558 death benefit payout from his life insurance because he did not do proper estate plan maintenance and, specifically, did not update the death beneficiary form on his life insurance after he divorced the previous wife and later married the subsequent one.
Another potential problem possibly awaiting your estate plan is a change in your state's laws. If, for example, you have a former spouse whom (unlike the man in Virginia mentioned above) you do wish to include in your legacy, and you have not updated your plan since before your divorce, your goals could be thwarted. Some (but not all) states have statutes saying that a divorce automatically invalidates any estate plan provision created to benefit the now ex-spouse. If your state didn't have such a law but then decided to create a new statute and adopt such a provision, then this person to whom you made a conscious and intentional decision to leave a distribution could end up getting nothing as a result of your plan not being updated to address this legal change.
Your estate plan "check-up" can serve other goals, too. It can allow you and your team of estate planning professionals to contemplate many questions, like whether a change in your amount of wealth might warrant additional planning steps, such as the additional of additional trust(s)... or whether you still have sufficient resources to pay for your final expenses and the other costs of carrying out your final wishes.
Whether taking inventory of your assets, taking inventory of the changes in personal life or taking inventory of the changes in the law, your estate plan review can give you the confidence that you have a plan in place that is optimized to deal with circumstances as they exist now, not as they existed when you signed your original set of plan documents.
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