A study from CNBC found that 33% of Americans have a current estate plan. These documents are important for securing your family’s financial future.
However, life is unpredictable, and situations change. You revisit and update your estate plan under certain circumstances to ensure that your wishes are accurately reflected.
1. Marriage or divorce
Life events such as marriage or divorce significantly impact your family structure and financial situation. In the case of marriage, you may want to include your spouse in your estate plan and allocate assets accordingly. Conversely, after a divorce, you may need to adjust beneficiaries and update your plan to reflect the changes in your relationships.
2. Birth or adoption
The joyous arrival of a new family member through birth or adoption necessitates a review of your estate plan. You will want to add the new family member as a beneficiary and consider how you want to distribute your assets to provide for their well-being in the future.
3. Changes in finances
Significant changes in your financial situation, such as a windfall or unexpected loss, should prompt a review of your estate plan. Adjusting beneficiaries, reassessing insurance coverage and updating the distribution of assets can help align your plan with your current financial reality.
4. Relocation to another state
Laws governing estate planning can vary from state to state. If you move to a different state, it is important to ensure that your estate plan complies with the new legal requirements. This can prevent potential complications and ensure a smoother transition of your assets.
5. Health changes
If you or a family member experiences a decline in health or receives a diagnosis that may impact your lifespan, it is important to update your estate plan accordingly. This may involve specifying medical preferences, revising beneficiaries or establishing trusts for ongoing healthcare needs.
6. Changes in tax laws
Tax laws are subject to change, and adjustments in legislation can affect your estate plan. Staying informed about tax law updates and adjusting your plan accordingly can help minimize tax liabilities.
Keeping your estate plan up-to-date is important. Regularly reviewing and revising your plan in response to life changes ensures that it accurately reflects your current circumstances and safeguards the future for your loved ones.