Do you think estate planning is a “set it and forget it” type of operation? Think again! Good estate plans are continuously modified and updated as the years go by. Life brings with it many changes and estate plans are not one-size-fits-all documents. Therefore, it is crucial that your estate plan is updated regularly to ensure that it is customized to your family’s unique needs.
Five Consequences of Failing to Update Your Estate Plan
What can happen if your estate plan is not updated? There are many possibilities, but the following are five of the more common:
- Your children receive their inheritance outright, free of trust. At first, you may wonder why that is a potential problem. But what if there is a compelling reason for holding a child’s inheritance in trust for a period of time? For example, what if a child is still young, struggling with an addiction, or in the midst of a divorce? If you do not update your estate plan to incorporate a trust to address these situations, you will not have any control over what happens to his share of your estate.
- Your assets are left to your minor children. Perhaps when you created your estate plan you did not have any children and your beneficiaries were all adults. When this happens, added court involvement by the appropriate Orange County court is needed before any distributions can be made to a minor child. This comes at a cost.
- Someone with whom you no longer have a relationship may be appointed as a trustee, personal representative, guardian of your children, or named as a beneficiary under your estate plan. Clearly, it is important to update your estate plan in order to ensure that the proper people are included.
- Your estate plan could create negative tax consequences if it is outdated and not in sync with current federal and state estate and income tax laws.
- Your small business could suffer substantial harm if you die unexpectedly with no succession plan. If you created an estate plan without accounting for your business interests or prior to starting the business, it is vital that you modify your plan accordingly.
It is important to keep on top of your estate plan to ensure that your goals and wishes are accomplished. It is helpful to stay in touch with your estate planning attorneys rather than putting your plan aside and forgetting about it once it is complete. Social media is a great way to stay in the loop. We encourage you to find us on Facebook.