6 Events Which May Require a Change in Your Estate Plan
Creating a Will is not a one-time event. You should review your will periodically, to ensure it is up to date, and make necessary changes if your personal situation, or that of your executor or beneficiaries, has changed. As 2011 winds to a close, it’s a great time to reflect back on the changes in your life. Keep in mind that there are a number of life-changing events that require your Will to be revised, including:
Change in Marital Status: If you have gotten married or divorced, it is imperative that you review and modify your Will. With a new marriage, you must determine which assets you want to pass to your new spouse or step-children, and how that may relate to the beneficiary interest of your own children. During a divorce it is a good practice to revise your Will, to formally remove your soon-to-be ex spouse as a beneficiary. Under Minnesota law, a divorce will remove your ex spouse as a beneficiary of your will even if you don’t actively change your will. The law treats the ex as if he or she predeceased you (insert sarcastic comment here) so you shouldn’t worry that your ex will inherit via your will once the divorce is complete. But what about during the divorce? Most clients with whom I’ve worked on these matters do not want their spouse to inherit while the divorce is pending, but that does not happen by law or inaction. If you are going through a divorce, you must take active steps to ensure that the spouse you are divorcing will no longer inherit through a will that hasn’t been updated to reflect your current status. While you’re at it, you should also change your beneficiary on any life insurance policies, pensions, or retirement accounts as these trump even your will. You may have disinherited your spouse from your will but if you forgot to change your life insurance policy he or she will still received the proceeds of that policy until you state otherwise. Estate planning is complicated when there are children from multiple marriages, and an attorney can help you ensure everyone is protected, which may include establishing a trust in addition to the revised Will.
If one of your Will’s beneficiaries experiences a change in marital status, that may also trigger a need to revise your Will.
Change in Relationship Status: If you enter or end a serious relationship in which you plan(ned) to leave your unmarried partner assets, you should meet with an estate-planning attorney who is well versed in the complexities of planning for unmarried couples. I handle many unmarried clients who have planned their estates together and if they ever break up, they will need to take active steps to revise their plans. Unlike for legally married couples, there is no law to automatically disinherit a partner after a breakup. While I do carefully draft these plans to include such provisioins, they will still be interpreted in court, which may lead to a lengthy and expensive court battle over those assets. This is the exact situation these couples attempted to avoid by coming to me in the first place. If you are entering a relationship that is not legally recognized, you should also meet with an attorney upon deciding to leave assets to each other OR if you want that person to handle medical or financial decisions on your behalf. I have experience handling nontraditional estate planning and can help you draft the right plan to protect your family.
Births: Upon the birth of a new child, the parents should amend their Wills immediately, to include the names of the guardians who will care for the child if both parents die. Also, parents or grandparents may wish to modify the distribution of assets provided in their Wills, to include the new additio