The COVID-19 pandemic thrust the world into an unprecedented era of uncertainty, challenging our health, our lifestyles and even our perception of our own mortality. This has accelerated discussion around estate planning and end-of-life preferences. But we don’t need to wait for a world event to review our estate plans – personal life events matter, too. The following major life events require updating your estate plan:
- Birth of a child or grandchild
The birth of a child is a momentous life event that brings joy and newfound responsibilities for parents. Grandparents often have a strong desire to provide for their grandchildren’s future, and leaving an inheritance is frequently considered. Instead of leaving money directly to a minor grandchild, you should consider naming them as a beneficiary within a trust, contributing to a 529 college savings plan and, as they grow up, giving them the gift of financial literacy as an invaluable part of your legacy. - Divorce
A divorce represents a significant transition that can have far-reaching consequences for your estate plan. Whether it’s your own divorce or the divorce of your adult child, when a marriage ends, it is crucial to review and revise your existing estate plan, including named beneficiaries on bank accounts, life insurance policies, trusts and retirement assets. Overlooking this step might inadvertently grant former spouses or in-laws unintended interests in your assets or decision-making during critical medical events. Consider what ongoing financial obligations you will have after divorce before you make significant revisions to your estate planning documents. - Relocating to be near loved ones
Many reevaluated their relationships and the role of family in their lives during the last several years. For some, this prompted a move to be near loved ones. Be mindful that moving to a new state can mean differences in laws and regulations that may affect the efficacy of your estate plan. Additionally, if you plan to pass your primary residence down to a loved one but have now moved, take the time to update your documents to reflect your new street address. - Loss of a spouse or life partner
Losing a partner can have a profound impact on your estate plan. This life event may necessitate changes in beneficiaries, executors and guardianship arrangements. Updating your estate plan ensures that your assets are distributed according to your current wishes and that you provide for your loved ones. Consult with a tax advisor to assess exposure to estate taxes after your own passing – this may have changed since your spouse has predeceased you. Additionally, assess your life insurance needs to protect your surviving family’s financial well-being.
Be Intentional in Selecting Representation
No matter what major life event you’ve gone through, naming trusted individuals in critical roles such as executor, financial power of attorney, healthcare agent and guardian is a vital aspect of estate planning. It’s an act of trust, love and responsibility toward your own well-being and the future of your loved ones. Openly discuss your wishes with your designees, provide specific guidance and be certain they understand the significance of their roles. Recognize that the person you name to raise your children or make serious medical decisions does not need to be the same individual who oversees your financial affairs. Each appointment requires different skills, level of trust and training, rarely found in a single individual. Assess if your chosen healthcare agent can execute instructions even if they disagree personally, and determine if your executor is diplomatic and capable of explaining complex matters clearly. Who you trust and what matters most to you may have shifted over the last several years, and that is okay. A CERTIFIED FINANCIAL PLANNER™ professional and licensed estate planning attorney can help you navigate the financial and legal aspects of your changing estate plan. A trusted team can serve as an anchor during difficult times. Find your CFP® professional today.
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