As previously mentioned, we encourage clients to develop an estate plan early (age 18) and to review and update that estate plan regularly. So many things can change throughout your life, and your estate plan needs to change with it. If your estate plan from age 18 is the only one that you ever execute and it is not otherwise revoked prior to your death, then it is the estate plan that will govern who cares for you during any periods of incapacity and how your estate is distributed upon your death.
Other common life events that may prompt you to update your estate plan include:
Separation and/or Divorce
If you are separated but not yet legally divorced, then you are still legally married, and absent a Separation Agreement agreeing otherwise, your legal spouse might have some rights that are contrary to your intentions. If you have a will in place that leaves everything to them and also appoints them as the Executor, then those directions will remain effective until your divorce is final. You should consider entering into a Separation Agreement with your spouse that waives any gifts and appointments made under your will and revoke any Power of Attorney and Health Care Power of Attorney that is in place naming your legal spouse as an Agent. You should also consider updating your estate plan entirely. Execute a new will that addresses your current situation and directs who should receive your assets and serve as Executor instead of your spouse and appoint different Agents under a new Health Care Power of Attorney and Durable Power of Attorney. If your legal spouse will not sign a Separation Agreement, then updating your estate plan is especially important in order to make sure that spouse has no role or benefit.
Upon divorce, gifts and appointments made under a pre-divorce will are revoked. If you still want to leave something to your ex-spouse or have them serve as Executor of your estate, you have to take additional steps after the divorce to confirm that. Assuming you do not want your ex-spouse involved in your estate plan, you should review your documents to make sure there is a back-up plan in place. If there is not, then you need to update your estate planning documents if you did not do so during your period of separation, as described above. Also, divorce does not revoke any Power of Attorney or Health Care Power of Attorney that appointed your ex-spouse as Agent. You will need to take steps to officially revoke those in order to prevent your ex-spouse from having power over your health and financial information.
Inheriting property upon the death of your parents or loved ones increases your assets in a way that might change the way you want your own estate distributed. If it is important to you that the land that has been in your family for decades pass to your children rather than your spouse, then review your will and update it accordingly.
Moving to a Different State
If you have an estate plan in place and you move to a different state, you should have an attorney in that state review your documents to make sure they are valid under that state’s laws.
Starting a Business
If you start a business, that is considered an asset. If your business is organized as a limited liability company (LLC), then you have a membership interest in that LLC that will need to be distributed upon your death. If your business is organized as a corporation, then you have stock in the corporation that needs to be distributed upon your death. Your distribution plan for that particular asset might be different than your general estate plan. For example, although your estate plan in general leaves everything to your surviving spouse, you might have a business partner or a particular interest child that you want to have your interest in the business. Either way, steps need to be taken to distribute those specific assets effectively.
Change in Assets
A change in assets could change the way you want your estate distributed. If you only owned your primary home when you initially drafted your will but now you own four rental properties as well, you might want to distribute that differently. Always keep in mind who is receiving what under your will. If you left all of your real estate to your children equally but one child has moved into a specific property which you would now like for him to keep, that should be addressed in your will.
Winning the Lottery
Last but not least, if you win the lottery (or come into significantly more wealth by some other means), you need to review your estate plan with an attorney to address possible estate tax issues. You might also want to consider setting up trusts to pass on such wealth in a more controlled and protected way.
If you have questions about estate planning or wish to begin your plan or update an existing plan contact our office Fuquay-Varina 919-552-4707 or send us an email.
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