If you have taken the time to create an estate plan, you have given a valuable gift to your loved ones and to yourself. Your estate plan can help grow your assets, protect you in the event of incapacity, and provide for your family in your absence. That plan, however, must be current in order for you and your loved ones to truly benefit from it. A estate planning attorney at Nash Bean Ford & Brown, LLP explains why updating your estate plan is almost as important as creating the plan in the first place.
The Importance of Estate Planning
The benefits of estate planning are many. Even a rudimentary estate plan ensures that your estate assets are distributed according to your wishes after you are gone and prevents the state from deciding what happens to those assets. It also allows you to decide who will oversee the probate of your estate. A more sophisticated plan can also accomplish things such as ensuring that someone of your choosing makes healthcare and personal decisions for you if you become incapacitated as well as letting you appoint someone to take over control of your assets during a period of incapacity. You may also have a trust in your estate plan that protects a minor child’s inheritance or that safeguards assets meant for a child with special needs. The benefits of a comprehensive estate plan are numerous; however, your plan’s value can decrease significantly if you fail to update the plan when necessary.
What Can Go Wrong If You Fail to Update Your Estate Plan?
To obtain the most out of your estate plan, that plan needs to be updated on a routine basis as well as when certain life events call for a more immediate review and revision. To illustrate the need to update your plan, consider some possible consequences of failing to update after certain events:
- Marriage – if you recently married, you want to include your new spouse in your plan. If you don’t, and something happens to you, your spouse may not be entitled to inherit from your estate. Worse still, if you become seriously ill, your spouse won’t be entitled to have a say in your treatment.
- Divorce — you probably don’t want your now ex-spouse to be the beneficiary of your life insurance policy (unless it is as the Trustee for your minor children) nor do you want him/her to inherit your estate assets. Worst still, imagine failing to update an advance directive that appoints your spouse as your Agent for making health care decisions for you in the event of your incapacity?
- Death of a fiduciary – throughout your plan you have appointed people to fiduciary positions, such as Executor or Trustee. If one of these fiduciaries passes away, a void is left behind. If your existing plan doesn’t address the void, a court will have to do so. Consequently, someone you would not want could end up administering your estate or a trust you created.
- Retirement – as you get older, the need to update your estate plan is heightened for several reasons. One of the most important reasons is long-term care planning. Unless you can afford to pay for LTC out of pocket, you may need to qualify for Medicaid. To do so, however, the value of your countable resources must not exceed the program limit. Moreover, assets transfers within five years of applying can complicated eligibility. This is one of the many reasons why you need to sit down and review your estate plan before you reach your retirement years.
If it has been more than five years since you sat down with your estate planning attorney and reviewed your current estate plan, now is the time to do so even if you haven’t experienced a qualifying life event that necessitates an immediate update.
Contact a Estate Planning Attorney
For additional information, please join us for an upcoming FREE seminar. If you have additional questions about the importance of updating your estate plan, or you are ready to get started updating your plan, contact an experienced estate planning attorney at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.