Estate plans may need to be updated based on life changes

Estate plans may need to be updated based on life changes

| Jun 2, 2021 | Estate Planning |

In New York State, people who have prepared for the future by creating an estate plan often make the mistake of leaving it as is despite life changes. The birth of a grandchild, different financial circumstances, divorce, remarriage – all can create urgency to alter an estate plan and update it accordingly. For those whose parents are reaching an advanced age, it is wise to provide subtle guidance and assistance as to the importance of reviewing the estate plan and considering what changes might need to be made for the document to be comprehensive for the current situation.

Older estate plans could present problems in the present

It could cause problems if a testator placed certain stipulations or left properties to heirs in an estate plan and failed to change it as needed. For example, a financial institution could ask for more information when the document was created a long time before the person died. Validity could be called into question if the person had a power of attorney. With these documents, signing a new one could smooth the process. State and federal laws are frequently changed. With the estate tax, it frequently hinges on the current presidential administration. For people with major assets, what is shielded from the estate tax could differ depending on the philosophy and political party of the occupant of the White House. Mitigating taxes is a key part of estate planning and the update can address this.

It is unfortunate that families may engage in disputes that leave one person not speaking to another. If the parent is estranged from a child and wants to leave a home, family heirlooms and other property to another child while removing the child with whom there is dispute, that must be done in the estate plan. This is also true with divorces. A common mistake people make is with retirement accounts. The account itself must be changed with the financial institution and it is frequently irrelevant what the will says in this context.

If an estate plan needs to be updated, knowing how is crucial

There is often reluctance to update a completed estate plan due to fear about the cost, whether it is necessary, if it can cause problems later and more. It is important to remember that the justification for creating an estate plan in the first place is to ensure that heirs go where the testator wants them to go. Other issues can be addressed such as special needs planning, whether a trust is better than a will and powers of attorney. For assistance with creating or updating an estate plan, it is useful to have experienced advice from the start.