Money milestones: 6 times to rethink estate plans

This article was written for our sponsor, Collegiate Capital Management, Inc.

If it’s been awhile since you’ve created an estate plan for your assets, it may be time to revisit it. After all, a good estate plan addresses issues that impact you throughout your life.

"For example, a revocable trust and powers of attorney can be critical in providing care for young children, elderly parents and the person preparing the plan," said Jay Krall, attorney at Elder Law & Estate Planning Center.

Updating your estate plan ensures your wishes are met and your will won’t go into probate, a process to establish its validity.

"Probate is expensive, long, public, and generally out of your control," said Cory Capps, vice president of investment management at Collegiate Capital Management. "Your beneficiaries — those that will inherit from your estate — will be saddled with months, if not years of probate administration, unnecessary expenses, and face one hurdle after another."

Avoid problems by updating your plan after milestones like marriage, starting a family, career changes, or divorce.

"Additionally, potential changes to federal and state laws along with your evolving investment portfolio and the need for continued updating and adapting of an estate plan become essential to ensuring your wishes are carried out correctly," said Capps.

Specifically, here are six times you need to rethink your financial estate plans.

Change in marital status

Whether congratulations or condolences are in order, marriages and divorces impact finances and estates in a major way.

"Whenever possible, one should review and update an estate plan before those life events occur," said Krall. Making firm plans that consider all parties in these situations can save headaches and heartache in the long-term.

"If you fail to update your beneficiaries, then the person you may have wanted to receive the assets 40 years ago will receive it," said Capps.

A brand new bundle of joy

As a parent or grandparent, you likely want to include new family members as your family grows.

"While many estate plans contain contingent provisions providing for children or grandchildren, the birth of a child or grandchild presents an opportunity to create a legacy that will continue for decades to come," said Krall.

You will also want to ensure any young children are taken care of if you die. In addition to traditional estate finances, don’t overlook additional measures to help ensure your family’s future. "Look into purchasing life insurance, which could aid in providing for your family if something happens to you or your spouse," said Capps.

Moving to a warmer climate or to be closer to grandchildren

Inheritance laws vary by state, so update your will and financial and health care powers of attorney to comply with local laws.

"While the statutory differences between states may be minor, just a small difference could reduce the effectiveness of — or void — an important part of an estate plan," said Krall.

A change in assets

Whether you buy or sell property or open a new investment account, it’s important to ensure that all changes are accounted for in a well-managed estate plan.

"Because the value of your estate will likely change with a change in property ownership, consider creating a revocable trust to distribute assets in the most efficient, cost-effective, and private way," said Krall. He adds that if a child is involved, it may be a good idea to designate a trustee to distribute assets.

"A trustee is helpful when dealing with beneficiaries under the age of 18 or for those that may be financially irresponsible," said Capps.

Similar to property assets, the best way to transfer non-retirement investment accounts to heirs is through a revocable trust, which can be named on new accounts.

"Existing investment accounts can be transferred by the trustmaker to the revocable trust," said Krall.

A loved one becomes disabled or dies

If someone in your estate plan becomes disabled or dies, it could impact how and what you distribute.While it is likely not the first thing on people’s minds when a tragedy or hardship occurs, remembering to take measures and action could possibly prevent more hardship or confusion in the future. In addition, knowledgeable estate planners can help account for these situations should they occur after you can make changes.

"A properly drafted estate plan includes contingent provisions specifically designed to addressthe potential illness, disability, and death of persons who may play a role in or benefit from the estate plan," said Krall.

A law changes

While the government may seem to move like molasses at times, estate and financial laws change more often than you might think. A professional can ensure your plan is in line with any changes to inheritance and tax laws.

"Changes in tax laws can have a substantial impact on the estate plans of high-net-worth families and individuals," said Krall.

Planning ahead and keeping up-to-date with laws will ensure that your money and assets go where you want them to. Otherwise, Capps said, "If you have no plan, probate courts will make all the decisions for you based on state law."

Regardless of your wealth or assets, having an estate plan and frequently updating it as life changes occur will ensure your wishes are carried out.

This article was written for our sponsor, Collegiate Capital Management, Inc.