Life Changes Should Lead to a Review of Your Estate Plan

Life Changes Should Lead to a Review of Your Estate Plan

If you've been diligent and thoughtful about putting together a comprehensive estate plan, the hope is that you won't need to care about beneficiaries – the "who gets what" – for a long, long time. If all goes well, a lot of life will happen between the time you sign your estate planning documents and the time you pass away.

Our lives are constantly changing – jobs relationships, homes, finances. But the estate planning documents you prepared do not, unless you make the effort to make the modifications necessary to ensure that they reflect these important and impactful life changes. This includes the beneficiary designations in those documents, like the people you picked to inherit your 401(k), company stock, and life insurance benefits.

If you don't regularly review and update your beneficiary designations to account for your life's changes, you could leave financial hardship behind for your loved ones when you pass away.

Blended Families, Adult Children, and Beneficiary Designations

Today, many people have so-called "blended families" where one or both members of a former couple remarry others with children from previous relationships. It makes sense that each spouse would want to provide for his or her blood offspring more so than stepchildren. Because state intestacy laws pass an individual's probate assets to blood relatives, many people turn to a will or trust or beneficiary designations in life insurance and retirement accounts.

Another approach to providing for blended families is the use of an "AB" Trust. This is a revocable living trust that is divided into two equal value trusts at a first spouses death. The Decedent's Trust becomes irrevocable while the other Trust remains revocable. If the Decedent had children that they wanted to benefit, then this is an appropriate structure.

Another life event that can have a very significant impact is the disability of an elderly family member or the birth of a child with special needs. If these individuals will receive any government assistance, then it may be advisable to establish an irrevocable special needs trust to preserve government benefits and improve the quality of their life.

Another benefit of a trust and beneficiary designation in retirement plans or insurance policies is that they avoid probate, a costly and lengthy process.

Other common issues that arise from unchanged beneficiary designations include:

  • Not adding additional children as beneficiaries when born;
  • Not removing deceased people as beneficiaries;
  • Not removing ex-spouses or former in-laws as beneficiaries;
  • Not making "special arrangements" for dependents with special needs

Meyer & Yee: Sacramento/Roseville Estate Planning Lawyers

At Meyer & Yee, we bring clarity and peace of mind to the often confusing area of estate planning. Dr. Meyer and our entire team will work closely with you to protect your interests, your family, and your life's work. If you have questions or require assistance with your estate planning, we provide responsive, accessible, and plain-spoken counsel. Please give us a call at (916) 599-7297 to discuss your issues and concerns. We look forward to the privilege of being your attorneys.

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