Having an estate plan is a smart way to protect yourself and your loved ones, both now and in the future. Your first estate plan is based on what’s happening in your life at the time it’s created. But life changes, and it’s important that your plan adapts as well. Sometimes we can build flexibility into your initial plan, but other times, updates or new tools may be needed to make sure your evolving wishes are honored.
Life Changes That May Affect Your Estate Plan
Life is full of changes, and some events may mean it’s time to reevaluate your estate plan.
These include:
- Increased value of your accounts and property
- A pay raise or significant growth in your retirement accounts
- Buying real estate in another state
- Receiving an inheritance
- Getting married, having a significant other, or welcoming a new child you want to provide for
Ways to Update and Improve Your Estate Plan
Your first estate plan isn’t set in stone. Here are some common ways we can update it to better reflect your changing needs and wishes:
1. From a Will to a Revocable Living Trust
- Will: A will allows you to decide who gets your money and property after you pass. However, it requires probate court oversight, which can be time-consuming and costly.
- Revocable Living Trust: This tool avoids probate, offering privacy and faster distribution of assets. It also ensures someone can manage your affairs if you become incapacitated. If your wealth has grown or you have new loved ones to provide for, this might be a better option.
2. Adding an Irrevocable Life Insurance Trust (ILIT)
- If you have substantial life insurance, an ILIT can protect those funds from taxes while ensuring they go to your chosen beneficiaries. The trust owns the policy and handles the distribution of the death benefit according to your instructions. This is useful if you want different beneficiaries than those listed in other parts of your estate plan.
3. Setting Up a Standalone Retirement Trust (SRT)
- If your retirement accounts have grown, consider naming a trust, rather than individuals, as the beneficiary. An SRT protects these funds from creditors and ensures they are used according to your wishes, especially for minors or loved ones who may need help managing money.
4. Including a Charitable Trust
- If philanthropy is important to you, a charitable trust can help you support your favorite causes while potentially providing tax benefits. Options like a Charitable Remainder Trust (CRT) allow you to enjoy income from the trust while ensuring the remainder goes to charity. A Charitable Lead Trust (CLT) lets the charity benefit first, with your loved ones receiving the remaining assets later.
5. Caring for Your Minor Children
- If you have or adopt children, your plan should reflect that. You can nominate a guardian in a separate document, and even set up temporary guardianship (or temporary power of attorney) if you’re unable to care for them during an emergency.
Let’s Keep Your Plan Updated
We’re here to ensure your wishes are always reflected in your estate plan. If you’ve had changes in your life, or just want a review, give us a call, and we’ll make sure everything is up-to-date and in line with your current needs.
