Updating an estate plan occasionally is necessary to ensure its validity. Many people make a point of reviewing and updating their documents every few years. They may also need to take immediate action when there are significant changes in their circumstances.
The sale of a home, the death of a beneficiary or a divorce can all be reasons to make major changes to an existing estate plan. Many people schedule sit-down sessions with their attorneys to go over their wills, trusts, powers of attorney and other documents.
Reviewing and updating the documents drafted with the assistance of an attorney is crucial. However, people may overlook another step that they have to take to properly control their legacy. Specifically, they may need to look into updating documents filed with outside businesses in addition to their formal estate planning documents.
Company paperwork can affect an estate
Many parents, spouses and successful professionals have life insurance policies. People take out policies to cover their financial obligations or support their loved ones after their passing. People sometimes assume that they can leave instructions for life insurance in wills or trust documents.
Unfortunately, the document that actually controls the distribution of life insurance policy proceeds is the beneficiary designation filed with the insurance provider. Those who need to change the beneficiary of their life insurance policies need to update the documents that the insurance company has on file rather than just their testamentary instruments.
The same is true of financial accounts with transfer-on-death designations. People often make arrangements to allow a loved one to take direct control over a financial account after their death. While they may not want to share ownership of the account during their lifetime, they want the account to pass directly to a specific person after their death.
The document filed with a financial professional managing retirement savings or a bank determines who can take control of an account after the current account holder dies. Updating those designations can help ensure that the right person receives the financial resources that belong to the testator.
Occasionally reviewing and updating an estate plan can be as important as taking the time to draft one in the first place. Accurate, up-to-date documents help protect testators as they age and establish their legacy after their death.
