When Is It Critical to Review Your Estate Plan and Why?

Like many important things in life, your estate plan works best when it gets periodic attention. Think of it as a preventive check-up. It is generally recommended that you review your plan every three to five years, even if life feels steady and unchanged. That said, certain major life events can make a review especially important. Here are some of the key life events that signal it may be time to review your estate plan.

Marriage

Marriage means new ways of sharing and managing finances and property. As a result, this is an important time to revisit your estate plan. A new spouse likely means you should be considering any necessary changes to your will or trust, and financial and medical powers of attorney. You will also need to consider updates to your retirement account, life insurance, and investment account beneficiary designations. Creating and updating your estate plan is especially important if it is a second marriage and children from a previous relationship are involved because of Texas intestacy laws. Proper estate planning is the only way to ensure that you protect your loved ones the way you want.

Birth or Adoption

Welcoming a new child into the family is an unforgettable time. You may feel inspired to look toward the future, and you should! This is an opportune time to start planning how you would like to provide for your new family member’s future. Because the child is young, it is important to consider not only what you would like to leave them for an inheritance but also how you would like them to receive it and who you would like to manage it. And while no parent wants to think about who will raise their child if they are unable to, it is also important to decide who would step in as guardian to care for your child if something were to happen to you. If you fail to document your wishes when it comes to the guardian of your minor children, a judge will decide for you.

New Job

A new job presents an exciting new set of challenges and opportunities to explore. It also brings very real financial changes. You may be receiving new benefits that require new beneficiary designations. When filling out these forms, the beneficiaries must be named appropriately so that your estate plan will work as designed. For example, if you set up a revocable living trust in order to avoid probate, it is important that the beneficiary designation is the exact, legal name of the trust. You will also need to make sure that your estate plan reflects the change in your financial status, whether it is a pay increase or a pay cut.

Loss of a Job

Similarly, leaving employment brings big changes to your financial situation and your estate plan. It is important to review your plan to determine whether updates are needed to reflect, for example, the loss of employer-provided benefits such as life insurance, any changes that need to be made to your retirement account, and whether any shift in your financial situation could impact your plan.

Retirement

Retirement brings lifestyle changes, more time for loved ones, and important financial transitions. It is crucial to update your estate plan now that you have stopped earning income and are beginning to use your retirement account. Family dynamics also change. For example, if your will was created 30 years ago, you may have heirs or executors named in your will that you no longer have a good relationship with and you would like them to be disinherited or replaced. Also, with this newfound freedom, you may find yourself traveling more, making documents such as financial and medical powers of attorney more crucial.

Moved

If you have moved across state lines, you should consult with a local estate planning attorney to ensure that your estate planning documents are still legally valid and you are fully protected under the laws in your new state. Even if you have moved within the same state, a new home will need to be incorporated into your estate plan. Meeting with an estate attorney before the purchase allows them to recommend how the deed should be drafted. If you have created a revocable living trust as the foundational tool in your estate plan, it may be best, depending on the situation, to have the home titled in the name of your trust. If you have already purchased your new home, an estate planning attorney can file a new deed if needed to make sure the property is titled in a way that aligns with your estate plan.

Divorce

Experiencing a divorce is one of the most difficult times in a person’s life. But looking out for your financial well-being and planning for the future is critical. While your divorce is pending, it is crucial to understand what changes, if any, you are permitted to make to your own estate plan. Once your divorce has been finalized, your estate plan can be changed or updated as needed. This process may include revising your will or trust, changing beneficiary designations on certain accounts (such as life insurance or retirement accounts), and ensuring that your ex-spouse does not inherit from you or have the authority to make financial or medical decisions on your behalf should you be unable to do so yourself.

Death of a Loved One

There is so much to handle after the loss of a loved one. However, this is one of the most important times to review your estate plan and consider whether any updates are needed. You may need to remove the deceased loved one as a beneficiary from any will, trust, life insurance policy, or retirement account, and determine who will receive that inheritance now. Reviewing your plan to identify whether your deceased loved one was appointed as one of your trusted decision makers (agent under a financial or medical power of attorney, successor trustee, or executor) is important. If so, it is important that you choose replacement decision makers and update your documents accordingly.

Received Inheritance

The death of a loved one not only brings grief and loss, but it may also result in receiving an inheritance. An inheritance can include property, money, real estate, mineral interests, and more. Receiving an inheritance may necessitate a change in your estate planning strategy. You may have a new account or property that needs to be retitled or a new beneficiary designation to incorporate into your plan. Also, depending on the value of the inheritance you have received, there may be additional estate tax, management, or asset protection concerns that need to be addressed to make sure your inheritance is protected.

Review Your Estate Plan Today

If it’s been a while since you reviewed your estate plan, or if recent life changes have you wondering whether it still fits, Stephens Legacy Law is here to help. Click below to schedule a review of your current estate plan and gain peace of mind knowing your plan still reflects what matters most to you.

Click Here to Book an Estate Plan Review

(806) 772-0190

kalyn@legacyfirmtx.com