Well, we’ve almost made it out of 2020. Now what? 2021 brings with it a lot of potential, not only for America to make it out of this pandemic, but also for life to restart. Job opportunities and career changes that have been sidelined can now begin, and any plans that were scrapped on account of the pandemic can possibly be revived.
2020 has been a big year for all of us, whether positive or negative. It is important, at the beginning of the New Year (if not now), for you to take this opportunity to review and update your estate plan, if necessary. In this article, we’ll give you a brief overview of that reviewing and updating process.
The General Rule of Thumb
Most people remember to review their estate plan at least semi-regularly. The general rule of thumb is to review your estate plan at least every three to five years, as something big is bound to have happened within that time frame. Also, you should review your plan when you have experienced a major life event, which we will discuss in the next section.
If you don’t have an updated estate plan, you might find yourself legally unprepared, which could lead to expensive and time-consuming fixes. It’s best to keep ahead of any possible changes, especially after a wild year like 2020.
Major Life Events
Discussed below are some of the most common examples of major life events that could possibly require estate plan changes.
New Family Members
To start on a happy note, new family members are always a cause for celebration. If your family has welcomed a new child—adoption or biological, it doesn’t matter—it might be time to update your estate plan to include them in asset distribution. Or, you might want to set up a tax-advantaged 529 savings plan to get a head start on your child’s college.
Illness & Death
If someone in your family has fallen ill or died, you might need to reflect that in your estate plan, whether that requires you to remove the deceased family member or sign on as power of attorney for another. If you are the one experiencing illness, you will want to get your healthcare in order through the use of legal tools like a healthcare directive, power of attorney, and guardianship papers.
Marriage and Divorce
Marriage and divorce are two other major life events that should set off an alarm bell in your head that you need to change your estate plan. The most common change that comes from marriage/divorce is adding or removing someone as a beneficiary.
Perhaps there have been changes in the circumstances of the estate plan. For example, if the proposed guardian of your kids or the proposed executor of your will has died, you will need to select a new one. If you have purchased a home or had a salary increase, you might also need to change your estate plan. Changes in the law and tax code are also common reasons that people need to change the plans they’ve made. A new career in a different field might lead you to the same conclusion. Only you know what goes on in your life, and it’s important to act quickly after an event has occurred.
To change your estate plan properly, you’ll need to contact your estate planning attorney. Explain that there have been some changes in your life, and you need to make additions, subtractions, and updates to reflect those changes. It’s advisable that you avoid sites like LegalZoom. Though convenient, these sites don’t have the ability to address all the nuances and quirks of the law. It’s best to get the process done correctly the first time, as that will save you time and money.
Check out our website for more info on estate planning and how to review your estate plan.