When was the last time you revisited your estate planning? Chances are, it was when you signed the stack of documents at your attorney’s office. Many individuals create an estate plan and then overlook it for years, which is a common mistake in estate planning. It is crucial to review your plan regularly due to evolving laws and significant life events like marriage, birth, divorce, or the passing of a family member. Updating your estate plan every 3 to 5 years ensures alignment with current laws and circumstances.
The Importance of Choosing the Right Fiduciary
An executor or fiduciary is entrusted with the legal responsibility of managing someone else’s estate. It is crucial to appoint the right individuals to represent your estate in court to avoid complications during the probate process. Executors are typically designated in a will and are responsible for overseeing the estate’s assets during probate, settling debts, expenses, and filing tax returns.
A trustee, on the other hand, controls assets held within trusts. While an executor’s role is temporary, a trustee may serve indefinitely or until the trust terminates. Properly selecting fiduciaries is essential to the success of your estate planning strategy.
Overlooking Changes as Children Grow Up
When children are young, parents often designate guardians in their estate plans. However, as children reach adulthood, the need for a guardian diminishes. It is crucial to update your estate plan to accommodate changes in your children’s lives, such as marriage or starting their own families. Failure to consider these factors can lead to estate planning strategies becoming outdated and ineffective.
Additionally, outdated estate plans may not align with current circumstances or wishes. Financial stability among children may vary, necessitating adjustments to the distribution of assets. It is essential to review and update your estate plan to reflect changing family dynamics and financial situations.
Failure to Account for Wealth Accumulation
Financial security is a common goal, but increasing wealth brings complexity. Growing wealth not only results in higher annual taxes but also impacts estate value and potential estate taxes. Updating your estate plan to include recent wealth accumulation is essential to ensure that your assets are distributed according to your wishes. Failure to update your plan with new assets may render it ineffective, leading to complications during probate.
regular updates to your estate plan are imperative to address changing laws, life events, and financial circumstances. By reviewing and revising your plan every few years, you can avoid complications in the probate process and ensure that your assets are distributed as intended. Remember that unforeseen circumstances may arise, so being prepared and seeking guidance from a probate lawyer when needed is crucial to effective estate planning.
