When You Should Consider Modifying Your Estate Plan

When You Should Consider Modifying Your Estate Plan

Estate plans can help individuals determine how their assets and property are divided after death. Many people believe planning for their estate is a one-time task, but that is not always the case. Life changes and other events may require modifying your estate plan. Find out when you may need to update these legal documents. If you have questions about estate planning in New York, please consider scheduling a consultation with the experienced New York estate planning attorneys at the Jennifer V. Abelaj Law Firm by calling 212-328-9568.

Why It Is Important to Update an Estate Plan

The American Bar Association states that estate planning is the process of determining how a person’s assets and liabilities will be transferred after death. Individuals may want to regularly review and update their estate plan to ensure that their assets and wishes are appropriately reflected in the documents. Failing to modify an estate plan could mean that assets are distributed to unintended beneficiaries. An estate plan holder should make any changes as soon as they arise or when they have a change of plans. With that, it may prevent any confusion or discrepancies in the distribution of their assets.

Updating an Estate Plan

When reviewing an estate plan, the individual will want to ensure that:

• Their intentions are still the same regarding assets and property.
• The plans include the proper beneficiaries.
• The document reflects significant life changes.

In some instances, there may be a need to update an estate plan. A few common reasons include the following:

Marriage, Divorce, and Partnerships

Family dynamics are constantly evolving. For that reason, many individuals want to ensure that their estate plan is up-to-date and reflects specific life changes. Anyone who has entered a new marriage will want to include the new spouse in the estate plan. Sometimes, that may include updating bank accounts, retirement accounts, and insurance policies to add the spouse as a beneficiary. On the other hand, if the estate plan includes a divorced beneficiary, it may be time to remove the ex-spouse from any estate plans and legal documents. Along with dividing up assets, estate plans also outline the power of attorney. If a person has named the ex-spouse as this individual, it could be time to make changes to the plan. 

Additionally, for anyone who is not legally married but has a partner, it may be the right time for modifying your estate plan to include them, especially if the individual is in a common-law marriage or domestic partnership. Sometimes, the partner may not be entitled to assets under state laws. For that reason, the person’s wishes should be evident in the estate plan to ensure the partner is a beneficiary after death. 

Children

Another reason for updating an estate plan includes listing children as beneficiaries. If the children are young, many estate plans will designate someone to be a guardian until they reach adulthood. For those individuals who have remarried a spouse with a child from a previous relationship, it may be time also to add those children into the estate plans. In some cases, state laws will only recognize stepchildren as heirs if the estate plan specifically names them in the document. 

People will want to update their estate plans with every life change. Unfortunately, some family members have disinherited their children and will want to make changes to the estate plan. As a result, the estate plan should be reviewed and updated to reflect those changes in the person’s wishes. Reach out to the Jennifer V. Abelaj Law Firm to learn more about planning for your estate. 

New Home State and Tax Changes

Along with the above situations, those who have moved to another state will want to ensure their estate plans comply with state laws. Even for those who have not moved, tax laws are constantly changing, and estate plans should stay current with new rules. Often, the individuals may want to establish a trust or will to ensure beneficiaries are not left with tax issues and can avoid probate. Otherwise, the Internal Revenue Service states that a gift tax is imposed when property is given to another person without receiving fair market value in return.

Beneficiary Changes

If a person wants to change or remove beneficiaries from the estate plan, that individual needs to make changes to all aspects of the plan, including updating assets, accounts, and powers of attorney. Failure to update all relevant documents can lead to confusion and discrepancies in the distribution of assets after the person’s passing. Additionally, if any named beneficiaries experience changes in their care needs, those plans will need to be revised, especially for those with special needs.

What Are Other Reasons to Modify an Estate Plan?

There may be unique reasons that may prompt an individual to update their estate plan. For example, if an individual has a trust and wishes to assign a new trustee, they will want to review and revise their revocable living trust to ensure that their trustee list is accurate and up to date. 

Significant life changes are not the only reason to update an estate plan. Those with a living will may want to periodically review it to ensure everything is outlined and make any necessary updates. Also, if an individual owns a business or plans to open one, a business succession plan can determine who owns and runs the company after they are gone. Many individuals should consider reviewing their estate plan regularly, ideally every three to five years, to ensure that everything is updated.

Consult With a New York Estate Planning Attorney Today

Modifying your estate plan ensures that changes to your assets and wishes are properly reflected and that the plan complies with local laws. People may want to update their estate plans when there are changes in their personal life, beneficiaries, or tax laws. Regularly reviewing an estate plan with an attorney may also ensure the plan is up to date. If you want to learn more about estate planning in New York, please consider scheduling a consultation with the Jennifer V. Abelaj Law Firm by calling 212-328-9568.