Changes in life are inevitable. A birth, death, marriage, divorce, move, property purchase or sale, change in laws and regulations, or the simple fact that our families age are the types of life events that can affect us in the present as well as impact our plans for the future.
When is the last time you reviewed your Estate Plan? Is it still relevant to your current situation? Is it time for you to dust off your trust?
The Three-Year Test
In most cases, Shoup Legal recommends that you engage in a strategic review of your estate plan if it’s more than three years old. The goal of a strategic review is to ensure the plan is up-to-date and rock solid so your family is protected.
Changes in personal circumstances—even those that might seem insignificant—can outdate Trusts and Estate Plans and make them completely ineffective, such as:
- Major changes in personal circumstances (marriage, divorce)
- Major changes to the law around taxes, property ownership, inheritance, etc.
- Significant changes to your property or assets, including the purchase or sale of real estate
- Your heirs aging from being minors to adulthood.
When such events take place, it’s a best practice to conduct a strategic review of your estate plan. Absent necessary updates, beneficiaries can be left out or left in inadvertently, which could lead to costly court proceedings, delays, and unintended consequences.
Old Estate Plans Can Be Dangerous: An Example
“When life happens, your Estate Plan needs to keep up,” explains Estate Planning Attorney, Andrea Shoup. “A prime example, is when families split or join due to divorce or remarrying, which can affect how a Trust applies to inheritance.”
One common issue is called inadvertent disinheritance.
“To illustrate, let’s say a husband and wife, married for decades, have children from previous marriages,” says Andrea. “They live their lives as a single-family unit, and when the husband dies, his share of the Trust goes to his widow, meaning she now controls 100% of the Martial Estate, as intended.”
However, if the couple does not have a properly prepared estate plan that accounts for their blended family, when she passes, 100% of her Estate goes to her children only because they are her natural heirs. Her deceased husband’s children are left out; they become inadvertently disinherited.
Taking this example a step further, if the wife were to remarry and she and her new husband haven’t planned well, upon her death, 100% of her Trust assets would go to the new husband and subsequently to his children, meaning that both the wife and the first husband’s children are disinherited.
Blended family estate planning is essential to avoid these kinds of unintended consequences.
“Estate planning can be complicated, especially when life intervenes,” says Andrea. “When laws and lives change, your Estate Plan should change to reflect your current situation.”
Schedule a Strategy Session
If your estate plan is more than three years old, or your family has experienced a significant life event, the attorneys at Shoup Legal can help.
Our team will conduct an in-depth examination of all your Estate Plan documents:
- Are they still legally enforceable?
- Will they accomplish what you want?
- Are there any legal issues to consider?
We’ll also explore whether your Trust is “fully funded,” meaning that all assets intended to be included in the Trust have been transferred into it. To do this, we’ll pull the titles for your real estate as well as look at all of your bank accounts, life insurance policies, investment accounts, and retirement accounts to make sure everything has been handled properly (even a simple bank account, if not in your Trust, can be stuck in court for months if not longer).
We’ll then provide a written summary and evaluation so no matter what you decide to do, you have a full report to take home regarding your Estate Plan.
Call us today at (951) 445-4114 or email us at [email protected] to schedule your strategy session.