Unless you put your estate plan in place late in your life, revisions will probably be necessary. Circumstances in your life will evolve. There may also be changes in the law. Either one of these can directly impact aspects of your estate plan. Let’s look at the details.
Family Growth
An estate plan for a responsible single person will be simple and straightforward. The plan should include enough life insurance to ensure your final expenses will be covered. And it will include a will or a living trust.
Unfortunately, incapacity can strike at any time. It can be the result of an injury sustained in an accident or a devastating illness. To account for this possibility, you should execute advance directives for health care.
A living will is one such directive. You can use it to record your life support preferences. You would use a durable power of attorney to name an agent to make medical decision that are unrelated to life support preference. And a disability trustee, selected by you, would make financial decisions for you if you become incapacitated.
Your durable power of attorney for property would be used to name a financial representative. This person would deal with assets that you never conveyed into the trust.
Marriage will totally change the playing field. You and your spouse will have to make some mutual estate planning decisions. Many young couples would benefit from the utilization of a joint living trust.
If you use a joint living trust, you and your spouse would be co-trustees while you are living. If you decide to have children, the successor trustee you name in the document would be able to manage assets on behalf of a child beneficiary.
Estate plans for young families should definitely include sufficient life insurance to serve as an income replacement vehicle. You can name your trust as the beneficiary of a life insurance policy.
An alternative to a living trust is a testamentary trust. This type of trust is contained within a will. The trust would be created in the event of your death. The trustee you designate would manage the assets on behalf of a minor.
Marital Status Changes
A change in marital status is a major life event that will render your existing estate plan obsolete. You may have to change beneficiaries of life insurance policies, individual retirement accounts, and estate planning documents.
In the event of a divorce, if you named your spouse as the representative in your incapacity planning documents, you will probably want to make some changes.
If you get remarried, you can protect the inheritances that you want to leave your children if you create a qualified terminable interest property (QTIP) trust. Assuming you die first, the trustee you empower would distribute the trust’s earnings to your spouse for the rest of their life.
Your spouse can also live in a home owned by the trust and use other property that has been conveyed into the trust. Your surviving spouse would be comfortable, but they would not be able to alter the terms of the trust. After their passing, your children would inherit the assets in the trust.
General Estate Plan Reviews
These are a few of the specific events that can trigger the need for estate plan updates. However, even if you have no particular reason to think that your estate plan should be revised, you should schedule periodic reviews with your estate planning lawyer.
As we stated in the opening, legislative mandates can have an impact on some estate planning techniques, and a layperson may not be aware of changes that have been implemented.
We Are Here to Help!
If you are ready to work with an Oklahoma City estate planning lawyer to revise your existing plan or create an initial plan, we are here to help. You can send us a message to request a consultation appointment, or we can be reached by phone at 405-843-6100.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.