WHEN SHOULD YOU UPDATE YOUR ESTATE PLANS?
A comprehensive estate plan is the best way to ensure that you and your family can maintain your standard of living, plan for bumps in the road, and ensure that your family is cared for if you die. While it may seem morbid, planning is one of the most loving things you can do for your family. But once you have an estate plan in place, you shouldn’t just sit back and assume you’re done. Estate planning is a lifelong endeavor, and you should update your plans whenever you encounter a milestone in life.
MARRIAGE OR DIVORCE
Marriage and divorce are two of the most life-changing events of anyone’s life. These milestones are also an important time to update your estate plan. When you get married, you’ll want to include your new spouse as a beneficiary on any life insurance or retirement plans you have. You may also want to include your spouse as a joint owner on real estate or name them as a beneficiary to any trust you’ve created. You should also update your will and any advance directives or powers of attorney related to health care or finances.
When you get divorced, it’s essential to update all of the same documents, particularly if you have children. You may want the bulk of your estate to pass to your children rather than your ex-spouse. It’s also important to update the beneficiaries of all of your accounts. If your ex-spouse is still a beneficiary on your life insurance, it will pass directly to them upon your death, despite any updates to your will. So, be sure to update your estate plan comprehensively.
BIRTH OF A CHILD
The birth of a child or grandchild is also an important time to update your estate plan. You need to include your new child through birth or adoption into your will and any trusts. You also need to ensure that your will addresses the new child’s guardianship upon your death or incapacity.
In Michigan, children aren’t able to own property or sign contracts. So, you’ll need to ensure that you address this. Upon your death, a court can appoint a guardian under the Uniform Transfers to Minors Act, or you can create a trust to hold your assets, directing a trustee on how to distribute the income to any heirs, including minor children.
WHEN YOU BUY A HOUSE
In the process of purchasing a home, people usually focus on making connections with realtors, mortgage lenders, and home insurance agents. It is also important to speak with an estate planning attorney. For most people, their home is their largest asset. This asset should be protected to go to their family members without having to go to probate court. By using estate planning tools to include your home, you can be assured that your family will not have to go to probate court to obtain the home.
WHEN YOU RETIRE
When you’re preparing to retire, it’s a great time to update your estate plan. Your financial advisor and estate planning attorney can ensure that your plan will provide income, plan for long-term care, or develop a strategy to qualify for Medicare-based long-term care. You will also need to ensure that you have advanced health care directives and powers of attorney to explain your wishes regarding end of life care. Retirement is the perfect time to think about your legacy and update your estate plan to account for charitable gifts and how to distribute your assets to your heirs upon your death.
If you need to develop a comprehensive estate plan, or if you need to update your plan to meet the needs of your changing family, Dallo Estate Planning can help.