I’m often asked when someone should make or update an estate plan. Is it at a certain age?
I think the best answer is not age-dependent, rather, it is when what I like to consider “life events” happen.
Here are the top five life events that necessitate making or updating an estate plan.
1. Children or Grandchildren. Adding to the family makes a good time to update your estate plan. Having an addition to your family can mean anything from providing another share of your estate to creating a trust for the child’s benefit. Some of the questions that can be answered at this time are: who will care for the child in the event I cannot? what assets are available for my child’s or grandchild’s care? who will manage these assets? when should my child or grandchild receive all of the assets?
2. Divorce or Marriage: Marriage and divorce impact your rights to your spouse’s property. Florida law has restrictions on who can receive your homestead property at death if you are married. Additionally, divorce may not be enough to disinherit your former spouse if he or she is listed as a beneficiary of a retirement plan. If the marriage is a second marriage, then providing for this spouse, and children from the prior marriage make updating your estate plan even more important.
3. Inheritance. If you’ve recently become the beneficiary of another’s estate or trust, now is a good time to make your own plan. You may have rights under a trust that you are otherwise not aware of and if you do not exercise your rights, you may be giving up property or the right to control the property. Additionally, you should be aware of your rights as a beneficiary, especially if your rights include your right to know what property is in the estate or trust.
4. Retirement. Retirement can be a time to celebrate. And it is also a great time to examine your plan to make sure that it meets your goals. Some common goals are: making sure a spouse is provided for adequately, updating beneficiary designations, protecting assets from creditors, and ensuring that a plan is in place in the event of disability. Retirement may also be a good time to determine whether a long term care plan is necessary.
5. Death of a Loved One. Major decisions should usually be put off for at least a year after such an event. But short term planning may be necessary especially if your loved one was the decision maker in your plan. Updating powers of attorney and health care surrogate forms may make sense at this time.
Adapting your plan to changing circumstances will allow you to match your plan with your goals.