When your family grows, it's time to update your estate plan.Creating a comprehensive estate plan is a smart financial move, but it's just the beginning. You will undoubtedly experience major life changes as time goes on, and your original plan may need revisions. 

Regular updates to your overall legal plan ensure your wishes are honored and your hard-earned assets go where you want them. An up-to-date estate plan offers peace of mind that your family will be covered and your financial issues are properly handled when you aren’t around to oversee them anymore.

Knowing When to Update Your Estate Plan

Updating your legal documents every few years is always a good idea, but sticking to a specific update schedule isn’t always the best option. Instead, you should review your estate plan with an attorney as your circumstances change. Some of those changes will be good and some bad, but all significant life events can have a major impact on your estate planning strategy. 

The curveballs life throws at you could make your existing trusts or will invalid or even actively unhelpful, such as if you still have a former spouse listed as a beneficiary. People who initially agreed to the guardianship of your children may have moved or passed away, or a close loved one like your spouse may suffer a disability requiring a special needs trust. 

While health and marriage are some of the biggest factors to keep in mind, they certainly aren’t the only reasons to update your planning. Even something as simple as moving to a new home could have legal repercussions for your estate goals, as laws vary widely from state to state. What worked in one state may not be in your best interest under North Carolina law, or it might not even be legal at all.

To keep your family protected by avoiding probate administration and making sure your assets end up where you need them to go, talk to an attorney after any of these events:

  • Your or your spouse experience a sudden change in health.
  • You’ve gotten married or divorced.
  • Your family has gotten larger due to the birth or adoption of additional children or grandchildren.
  • You’ve moved to North Carolina from a different state.
  • You’ve started a new business.
  • Your financial circumstances have significantly changed to an increase or decrease in income.
  • You want to make changes in your existing estate plan, such as changing guardianship over your children, modifying beneficiaries, disinheriting an heir, or changing the trustee to your existing trusts.
  • Changes in state or federal laws have gone into effect that could impact your existing estate plan.
  • More than five years have gone by since your last update to your existing estate plan.

In short, if it's something you would cover in the Christmas letter or call your children directly to break the news about, then you probably need to update your estate plan.

What to Discuss When Updating Your Estate Plan

As people come and go from your life and your assets change, what made sense to originally go into your estate plan is likely no longer relevant. In particular, changes to your finances, whether positive or negative, may create a need to modify where your assets go when you are gone. 

For instance, if your real estate value took a hit or you suffered a major financial setback, it may no longer make sense to give the bulk of your assets to an organization or charity as originally planned. Instead, you may want your remaining funds to go directly to your family.

Issues stemming from sudden health changes should also be discussed with your attorney before making any financial decisions. You may be tempted to start immediately gifting assets to your spouse, children, or charities after suffering a physical health setback or receiving a diagnosis like Alzheimer’s. It is absolutely critical to speak with an experienced North Carolina estate planning attorney to update your legal strategies before making those kinds of changes. 

These tough financial decisions can cause you major headaches if they aren’t done in line with your overall estate goals. Due to the Medicaid five-year look-back period, gifting money and real estate may cause you significant problems if you end up needing to stay in an assisted living facility. With an updated trust in your estate plan, you have less to worry about while still receiving the care you need.

Do You Need to Update Your Estate Plan?

Don’t put off updating your estate plan. Anytime you experience a big change in your life, get in touch with a skilled North Carolina estate planning & probate attorney to make sure your existing plan still makes sense.  Even if you created your trust or will with a different attorney or in another state entirely, Legacy Lawyers can help keep you up to date and ready for the future. 

 

John J. Peck
Wilmington North Carolina Elder Law & Estate Planning Attorney
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