New York residents who believe they have fulfilled the need to have an estate plan and simply leave the document as is without changing it are often making a mistake. With the inevitable changes in life, there are times that an estate plan is no longer as current and applicable to the circumstances as it was when drafting estate planning documents. Therefore, it is wise to think about life changes and act accordingly by updating an estate plan. Knowing when to do so is key.
Those who have crafted an estate plan should think about various factors, including the possibility that the person will be incapacitated and need a power of attorney. This is true even for people who have just reached legal adulthood at age 18 and are being proactive by creating an estate plan. Getting married is a critical juncture in a person’s life and with the new life should come a new estate plan. During the marriage planning, there are some difficult discussions that are important. That includes whether there will be a prenuptial agreement or not and how the assets will be distributed if one spouse dies.
Having children is a goal in the lives of many people. This is undoubtedly a happy time, but it also requires preparation with an estate plan. The children will be in line to inherit the parents’ assets and preparation is needed to determine how this will be done, especially if the parent dies before the child is of legal age and maturity to handle the assets and needs a legal guardian. A trust can be created to protect the children and give them the assets as needed or if certain milestones are met.
Unfortunately, not all marriages succeed. When there is a divorce and the estate plan has named the now-former spouse as the main beneficiary, it is vital to change the document. For example, if there is a divorce and the estate plan was unchanged, with a person remarrying or wanting children or blood relatives to get the inheritance, the ex-spouse will receive it and there is little that can be done about it.
Retirement accounts are a different situation as they have a person named as the beneficiary and it does not matter who was named in the estate plan. Retirement accounts go to the named beneficiary. This too must be changed. When any notable life event occurs, it should be a priority to think about how it impacts estate planning needs.