Change is inevitable, and as life's circumstances evolve, so should your estate plan. An outdated plan can lead to unintended consequences, leaving your assets unprotected and your loved ones in a difficult position. At Kavesh, Minor & Otis, our knowledgeable California estate planning lawyers are dedicated to helping clients keep their plans current and effective.
We understand that knowing when to update your estate plan can be a challenge. That's why we've compiled this guide to help you recognize the key life events that should trigger a review and potential revision of your plan. By staying proactive and working with an experienced California estate planning lawyer, you can ensure your wishes are carried out and your family is cared for, no matter what the future holds.
Changes in Marital Status
A change in your marital status is one of the most critical times to update your estate plan. Whether you're getting married, divorced, or have lost a spouse, these transitions necessitate a review of your documents.
If you're newlywed, updating your plan allows you to:
- Include your spouse as a beneficiary in your will and trust
- Name your spouse as your executor or trustee
- Update beneficiary designations on life insurance policies and retirement accounts
- Consider creating a marital trust for additional tax benefits
On the other hand, a divorce means removing your ex-spouse from your plan, which may involve:
- Revoking your current will and creating a new one
- Amending your trust to remove your ex-spouse as a beneficiary and trustee
- Updating beneficiary designations on insurance policies and retirement accounts
- Reconsidering your choice of executor, trustee, or guardian for minor children
Note that under California Probate Code Section 6122, while a divorce might automatically cancel parts of your will the benefit your ex-spouse, it doesn’t nullify everything. You’ll still need to actively update your documents to match your new situation, whatever that may be. Our estate planning attorneys can help you navigate these updates to make sure your assets go exactly where you want them to go, depending on where you find yourself in life now.
Growing Your Family
Welcoming a new child into your family is an exciting milestone, but it also means it's time to update your estate plan. You'll want to make sure your plan includes provisions for your child's care and financial well-being.
Updating your plan when you have a new child allows you to:
- Name a guardian for your child in your will, specifying who will care for them if something happens to you
- Create a trust to manage assets for your child's benefit and specify when they will receive distributions
- Ensure your child is included as a beneficiary in your will, trust, and beneficiary designations
- Consider creating a 529 plan or other educational savings account for your child's future
As your children grow older, your estate planning needs will change. Once your kids reach adulthood, you may want to:
- Update your plan to include them as beneficiaries or successor trustees of your trust
- Consider creating a dynasty trust to provide for future generations
- Discuss your plan with your adult children to ensure they understand your wishes and their roles
If a child gets married or starts a family of their own, it's another good time to revisit your plan to ensure it still aligns with your goals and accounts for any new family members.
Acquiring or Selling Significant Assets
Your estate plan should cover all your big-ticket items — like real estate, business stakes, investments, and high-value personal property. Any time you acquire or sell a significant asset, it's essential to review your plan.
If you acquire new assets, updating your plan allows you to:
- Specify how the new assets should be distributed upon your passing
- Ensure the titling of the new assets aligns with your overall estate planning strategy
- Consider the tax implications of the new assets and adjust your plan accordingly
- Update your inventory of assets to keep your plan current
And if you sell an asset that was specifically mentioned in your will or trust, you'll want to remove that reference to avoid confusion and potential disputes. Your estate planning lawyer can help you review your assets and make the necessary changes to keep your plan up-to-date.
Changes in Tax Laws
Tax laws are complex and subject to change, which can have a significant impact on your estate plan. By staying informed and working with an experienced attorney, you can create a plan that minimizes taxes and maximizes what you leave to your loved ones.
Some key tax considerations that may prompt an update to your estate plan include:
- Shifts in the federal estate tax exemption, which often increases over time
- Modifications to state estate tax laws, as California has its own estate tax that operates independently from the federal tax
- Updates to income tax laws that may affect the taxation of trusts and inherited assets
- Changes to gift tax laws that may impact your ability to transfer assets during your lifetime
By working closely with a knowledgeable California estate planning lawyer, you can create a plan that is both legally sound and tax-efficient. Your attorney can help you stay abreast of any tax law changes and adjust your plan accordingly.
Shifts in Relationships
Relationships can be complex, and over time, your connections with family members or friends may evolve. These changes may necessitate an update to your estate plan to ensure it reflects your current wishes.
Some relationship changes that may prompt an update to your plan include:
- Growing closer to a relative or friend and wanting to include them as a beneficiary
- Experiencing a falling out with a family member and no longer wanting them to serve as your executor or trustee
- Recognizing that a chosen guardian, executor, or trustee is no longer able to fulfill their role due to illness, age, or other circumstances
- Wanting to add or remove a charitable beneficiary based on your current philanthropic goals
By keeping your plan updated to reflect your current relationships, you can ensure your wishes are carried out and minimize the potential for conflicts among your loved ones.
Health Changes
A serious illness or disability can have a significant impact on your life and your estate plan. If you haven't already done so, a health scare should prompt you to create or update your advance health care directive and power of attorney documents.
Updating your plan in light of a health change allows you to:
- Specify your wishes for medical treatment, including end-of-life care
- Appoint someone you trust to make healthcare decisions on your behalf if you become incapacitated
- Set up a durable power of attorney for finances, so someone you trust can step in and manage money if you find yourself unable to
- Consider the potential need for long-term care and how to pay for it, such as through long-term care insurance or Medicaid planning
By keeping these documents up-to-date, you can ensure your wishes are respected and relieve your loved ones of the burden of making difficult decisions during an already stressful time.
Regular Check-Ins
Even if you haven't experienced a major life event, it's wise to review your estate plan every few years. Your personal preferences and goals may shift over time, and regular check-ins ensure your plan keeps pace.
At Kavesh, Minor & Otis, we recommend reviewing your estate plan every three to five years, or sooner if you've had significant changes. During these check-ins, we'll:
- Review your current assets and ensure they're properly titled and accounted for in your plan
- Discuss any changes in your family, relationships, or personal circumstances that may impact your plan
- Evaluate the effectiveness of your current plan in light of any tax law updates or other legal changes
- Make any necessary updates to ensure your plan reflects your current wishes and goals
By staying proactive and reviewing your plan regularly, you can ensure it remains effective and provides the protection and peace of mind you and your loved ones deserve.
Working With an Experienced California Estate Planning Lawyer
Updating your estate plan might feel overwhelming, but with the help of the right skilled California estate planning lawyer, the process can be seamless and stress-free. At Kavesh, Minor & Otis, our team is dedicated to helping clients create and maintain comprehensive, effective estate plans.
When you work with us to update your plan, you can expect:
- A full review of your current plan and everything you own
- One-on-one attention and a deep dive into what matters most to you
- Advice on the what needs to change to keep your plan on track
- Skilled drafting of any new or revised documents, ensuring they are legally sound and reflective of your wishes
- Ongoing support and regular check-ins to ensure your plan stays up-to-date as your life changes
Don't put off updating your estate plan until it’s too late. More likely than not you want to avoid any hassles, and the sooner you update your estate plan, the less likely you’ll be dealing with any. Our experienced California estate planning lawyers are here to guide you, providing the peace of mind that comes with a well-crafted, up-to-date plan.
