By Roy Schneider, Esq.
Creating an estate plan is not a one-time event. You should review your estate plan periodically, at least every 3 - 5 years or whenever there is a change in either the law or your family, to ensure it is up to date and make any necessary changes. There are a number of life-changing events that could potentially require changes to your plan, including those to your family and finances, such as:
Change in Marital Status: If you have gotten married or divorced, it is imperative that you review and modify your Trust. With a new marriage, you must determine which assets you want to pass to your new spouse or step-children, and how that may relate to the beneficiary interest of your own children. Following a divorce, it is a good practice to revise your Trust, and to formally remove the ex-spouse as a beneficiary. While you’re at it, you should also change your beneficiary on any life insurance policies, pensions, or retirement accounts. Estate planning is complicated when there are children from multiple marriages, and our estate planning attorney can help you ensure everyone is protected.
Depending on jurisdiction, this may also apply to couples who have established or revoked a registered domestic partnership.
If one of your Trust’s beneficiaries experiences a change in marital status, that may also trigger a need to revise your Trust.
Births: Upon the birth of a new child, the parents should amend their Trusts immediately, to include the names of the guardians who will care for the child if both parents die. Also, parents or grandparents may wish to modify the distribution of assets provided in their Trusts, to include the new addition to the family.
Deaths or Incapacitation: If any of the named executors or beneficiaries of a Trust, or the named guardians for your children, pass away or become incapacitated, your Trust should be revised accordingly.
Change in Assets: Your Trust may need to be changed if the value of your assets has significantly increased or decreased, or if you dispose of an asset. You may want to modify the distribution of other assets in your estate, to account for the changed value or disposition of the asset.
Change in Employment: A change in the amount and/or source of income means your Trust should be examined to see if any changes must be made to that document. Retirement or changing jobs could entail moving to another state, thus subjecting your estate to the laws of that state when you die. If the change in income modifies your investing, saving or spending habits, it may be time to review your Trust and make sure the distribution to your beneficiaries will be as you intended.
Purchase or Sale of a Business
If you have recently purchased a business, then you should meet with an estate planning attorney to insure that your estate plan is structured properly to deal with the business if you become disabled or after you die, and also to put together a comprehensive business exit plan. On the other hand, if you've recently sold a business, then you should meet with an estate planning attorney to insure that your plan is properly structured now that you don't own a business, that the sale proceeds are titled in the name of your Revocable Trust, and to determine if your estate is no longer, or has become, taxable. If it has become taxable, then you'll need to figure out how the taxes will be paid as well as ways to minimize the estate tax bill.
Changes in Probate or Tax Laws: Trusts should be drafted to maximize tax benefits, and to ensure the decedent’s wishes are carried out. If the laws regarding taxation of the estate, distribution of assets, or provisions for minor children have changed, you should have your Trust reviewed by an estate planning attorney to ensure your family is fully protected and your wishes will be fully carried out. Since there was a significant change in the Estate Tax Law effective this year, we consider that an event which may make a review of your estate plan at this time, particularly timely.
Further, you may wish to consider the state of your Powers of Attorney and Health Care Directive to make sure they comply with current California law and are reflective of your wishes.
Contact Schneiders & Associates, L.L.P. today for your estate planning questionnaire and to schedule your complimentary consultation. During your consultation, our estate planning attorney will review your family and financial situation, discuss your wishes, answer your questions and suggest strategies to protect your family, wealth and legacy.