It’s time to ring in the New Year, and while that means looking ahead to 2020, it also means reflecting on the events that transpired in 2019. From an estate planning perspective, there are several events that can necessitate changes to your existing plan. The start of the New Year is a good time to make sure you have a solid foundation in place and to ensure that your estate plan is structured appropriately to cover any changes you foresee happening in 2020.
Let’s start by taking a look at the types of changes that may require you to update your estate plan:
It Might Be Time to Update Your Estate Plan If…
1. You Welcomed (or are Expecting) a Child or Grandchild
The birth of a child or grandchild is an event that will often have significant estate planning implications. Whether you are a first-time parent or you already have multiple grandchildren, making sure your estate plan adequately reflects your current family circumstances should be a priority.
2. You Got Married, Separated, or Divorced
In this same vein, if you got married in 2019, or if you got separated or divorced in 2019, you will almost certainly want to update your estate plan in 2020. While getting married has certain automatic legal effects in South Carolina, there are still steps you may need to take in order to ensure that you and your spouse both have estate plans that reflect your long-term wishes. Conversely, getting separated or divorced does not automatically withdraw any rights you granted to your former partner or spouse in your estate plan, and this is an issue that you will want to rectify promptly.
3. You are Planning to Get Separated or Divorced in 2020
In fact, even if you are not yet separated or divorced, it may be advisable to modify your estate plan now rather than waiting until your separation or divorce is final. Consider, for example, what will happen if you get sick while your legal proceeding is pending: Is your spouse or partner currently named as your health care surrogate or power of attorney? If so, do you still want him or her making decisions about your health care during your separation or divorce?
4. You Lost a Loved One
If you lost a loved one in 2019, you will want to make sure that your estate plan is updated to appropriately reflect your final wishes. This is particularly important if you had selected your loved one as your personal representative, your trustee, or a named beneficiary of your estate, but it can be important under other circumstances as well.
5. You or Your Child was Diagnosed with a Physical or Mental Disability
Special needs planning is a critical component of the estate planning process for individuals and families who are living with physical and mental disabilities. From updating your health care planning documents to establishing a special needs trust, there are several considerations you may need to address following a diagnosis.
6. You Bought or Sold a House
Whether you bought or sold your primary residence or you bought or sold a beach house on the coast, any type of significant real estate transaction will typically necessitate updates to your estate plan.
7. You Opened a New Bank Account, Brokerage Account, 401(k), or IRA
Likewise, even though most types of financial accounts allow you to make direct beneficiary designations without modifying your estate plan, opening a new bank account, brokerage account, 401(k), or IRA could have implications for other gifts you made as part of your plan as well.
8. You Received an Inheritance
Receiving an inheritance from a loved one is an event that can have direct and significant implications for your own estate plan. If you now own sizeable assets that you did not own when you put your current estate plan in place, you will likely need to make changes in order to ensure that your newly-acquired assets will be distributed as you desire and without unwanted tax implications.
9. Your Personal Finances Changed Significantly
The same is true if you are earning substantially more income due to a promotion, a career change, or the decision to start or grow your business. Not only do you need to make sure your newly-earned income will be distributed as you desire in the event of your death, but you also need to make sure that it is adequately protected from creditors and the Internal Revenue Service (IRS).
10. It has been a While Since You Last Reconsidered Your Estate Plan
Finally, it may be time to revisit your estate plan in 2020 if it has simply been a while since the last time you thought about it. When one year turns into two, and when two years turn into five, you might suddenly find that a lot of small changes add up to make your estate plan out-of-date.
Should You Revise, Replace, or Start Over from Scratch?
If it is time to update your estate plan, what exactly will this entail? Can you just make a few revisions and print and sign new copies? Should you replace one or more of your current planning documents with a different document that is more well-suited to your current circumstances? Or, has so much changed that it is time to start over from scratch?
In order to answer these questions, you will need to discuss your situation with an estate planning attorney. There is no single “right” answer, and each person has different needs. Depending on the current state of your estate plan, it could be the case that only minimal adjustments are required. However, you may need more as well; and, if this is the case, you will want to make sure you do what is necessary to ensure that your estate plan serves your long-term goals.
Speak with Summerville, SC Estate Planning Lawyer Patrick R. Watts
If you have questions about updating your estate plan, we encourage you to contact us to arrange a confidential consultation with Summerville, SC estate planning lawyer Patrick R. Watts. To request an appointment at your convenience, please call 843-851-7050 or inquire online today.