Many believe in the phrase “change is good”, however change can also lead to great doubt and concern. At times, life changes may be positive, such as marriage, moving into dream homes, new career opportunities or the birth of a child. Conversely, there are also heavier transitions such as financial struggles, health issues or the loss of a beloved family member or a job.
In the face of life’s uncertainties, it’s best to plan ahead so that you can secure your future. Creating and updating an estate plan can provide your mind with much peace during a difficult time.
Through estate planning, you can ensure that your assets are distributed according to your wishes in the unfortunate event of an untimely passing or incapacitation. It allows you to set up a plan that is in the best interests of those who depend on you as well.
In this article, we will look at the impact of different life changes on estate planning and why you need to keep your estate planning documents up to date.
Let’s begin!
What Is an Estate Plan?
An estate plan is a set of legal documents and arrangements detailing how you want your personal assets and affairs to be managed, distributed or handled for when you can no longer manage them yourself.
It includes key legal tools and documents such as Wills, Trusts, Powers of Attorney (POA), Guardianships and more. Nowadays, with the convenience of online legal service providers, you can also create a will or apply for a POA online.
The main goal of estate planning is to ensure that your wishes are carried out effectively and assets are transferred efficiently in accordance with them.
8 Life Changes That Can Impact Your Estate Plan
1) Marriage
When you decide to share your life with another individual through marriage. It results in a personal union as well as a significant change in the legal and financial landscape.
Upon marriage, your spouse may become your primary heir in the eyes of the law. As such, you may want to make them a beneficiary or assign them other important roles. Such as becoming an executor or the guardian of your children.
It is important to update your estate plan to ensure your assets align better with new familial circumstances.
2) Birth or Adoption of a Child
The arrival of a new child is a happy occasion that can generate much excitement. However, amidst all the chaos, you mustn’t forget the impact this life event has on your estate planning.
You need to make provisions for the guardianship and financial support of your child in case something unforeseen happens to you.
Moreover, if you do not name a legal guardian for your children in your Will. This decision will be made by a court. This can result in a lot of unnecessary stress during an already difficult time for your family.
3) Divorce
Unfortunately, sometimes marriages can result in separation and a divorce is a major life change that can impact your estate plan. During this time, you need to review and adjust your plan to reflect changes in asset distribution. Beneficiaries and the removal of your former spouse from any key roles within your plan.
4) Change in Financial Status
A big part of estate planning revolves around the types and sizes of assets you own. As such, any changes in your financial status, whether positive or negative, may warrant a reassessment of your estate plan.
Adjusting how you would like assets to be distributed, revisiting beneficiaries and considering tax implications are all essential steps to keep your plan aligned with your current financial situation.
5) Changes in Health
A significant change in your health, whether a diagnosis of a serious illness or a general decline in health, may prompt a review of your estate plan.
You need to make sure your healthcare wishes are properly documented and your estate plan is in order to ensure. That your medical and financial wishes are effectively handled in the future. This provides peace of mind and can reduce the burden on your loved ones during a challenging time.
6) Evolving Business Ventures
If you own a business, your estate plan needs to reflect any changes regarding business ownership or structure. With effective succession planning, you can ensure the smooth transition of business assets when you are no longer here.
7) Changes in Tax Laws
Tax laws change at any time and can also significantly impact your estate. It is essential to keep your Will up to date with current tax laws to ensure that your estate is managed in a tax-efficient manner.
8) Death of a Beneficiary
The untimely passing of someone named in your will. Whether they are a beneficiary or even executor, requires to be addressed immediately. You will need to update your Will to reflect these specific changes.
To Sum Up
Estate planning can be a long and time-consuming process. However, it is a necessity if you want to protect your assets and secure your future. It is equally important to revise and update your estate plan to reflect any major life changes or events.
When considering updating your estate plan, it is advisable to consult legal and financial professionals. With their help, you can receive personalised guidance to ensure your plan remains effective and valid.
By keeping your estate plan up to date, you can prevent unintended consequences and ensure that your wishes are carried out as you intended.
