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The question, “When should I update my estate plan?” is often asked when creating an estate plan. The answer usually depends on what is going on in your life, but it can also depend on updates in the law and important court decisions.
Your estate plan is not just a bunch of paperwork you sign then put away and forget about. Instead, the details of your estate plan should reflect your evolving needs and various changes in your life.
There are a number of different events that can occur in your life that could trigger a change in your estate plan. The following are some of the more typical events:
- Marriage – You may want to include your new spouse in your estate plan. In second marriages, often trusts are utilized;
- Divorce – You most likely want to change what you planned on leaving to your ex-spouse. Although under New York law, a divorce will terminate an ex-spouse’s rights under a will, unless contrary intent is clearly shown, it is never a good idea to leave your wishes up for the interpretation of others. Creating a new will is the best way to create a clear understanding of your wishes.
- Separation – Unlike divorce, a separation does not terminate a spouse’s rights under a will in New York;
- Death of spouse – If you left a significant portion of your estate to your spouse in your will, you should update your will;
- Death of an heir or dependent – If one of your heirs dies before you do, you should update your will to reflect a new recipient if a contingent is not provided;
- Birth of a child or grandchild – If you do not update your estate plan when there is a new addition to your family, you run the risk of inadvertently disinheriting your newest child or grandchild.
- Significant change in your estate’s value – A significant change in the value of your estate could mean significant tax implications. In this case you should speak with a qualified professional to discuss the potential tax implications and how to plan accordingly;
- “Aha” moment – Sometimes things happen to us that force us to look at life from a new perspective. These life events may cause you to reevaluate to whom you want to leave something. For example, you become passionate about a specific cause and decide that you want to leave a large portion of your estate to a charity that champions that cause.
Even if you have not experienced any of these life events, it is always a good idea to have a routine check-up of your estate plan to make sure there is no significant change in federal and/or state laws or any significant case decisions that may alter your plan.
By Eric J. Einhart – Guest Blogger