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How Long Since You Looked at Your Will or Trust? If You Haven’t Recently, You May Want To

Most estate planning professionals will tell you that one of the biggest mistakes you can make is failing to update your estate plan. That’s because if you die with an estate plan that is not up-to-date, your plan likely won’t function the way you wanted, and may leave out beneficiaries you wished to remember, or provide an inheritance to someone you did not want to receive one.

Perhaps the most obvious circumstance where you would want to update your estate plan is when a beneficiary dies. If the death is to a child, and you wish his/her children to receive that share, your existing plan may already cover that. But say that you left a significant amount to a beloved cousin, a trusted friend, or even perhaps a second spouse you married later in life, who has children with whom you have no blood relationship. You probably will want to consider updating your plan to make certain that all of your assets go to your loved ones, not people who you may not even know, who simply share a kinship with your loved one.

Birth may also trigger the need for an estate plan update. For example, if your plan leaves a specific amount to each grandchild, and one of your children welcomes a new addition to his/her family, an update may be in order. This update may simply name this new baby as a grandchild and indicate his/her inclusion in the grandchildren’s inheritances, or you may need to consider reducing the amount you leave each grandchild, now that there are more of them.

Marriages and divorces may also create a possible need for an update. If you divorce, you should be certain to update all your documents, including your accounts with death beneficiary designations. The death beneficiary forms on those accounts, in many cases, trump your stated intentions in your will or trust, may create an undesired inheritance for your ex-spouse. A new marriage or divorce by a beneficiary may also establish a need for an update to correct, or at least clarify, your objectives.

Wisconsin law automatically disinherits an ex-spouse upon your divorce, which is good if you do not change your will or trust immediately. Keep in mind that this disinheritance is not always effective for insurance policies, and named account beneficiaries, especially regarding federal benefits and out-of-state financial instruments or property.

An event many people may (but shouldn’t) overlook as a trigger for updating a plan is a change in your financial condition. This is especially true if you’ve left fixed amounts to some or all of your beneficiaries. That $15,000 distribution to each of your 35 grandchildren may no longer make good planning sense for you if, for example, your retirement savings suffered a massive setback in the stock market. Similarly, if you just won $40 million in the Powerball lottery, you may decide that increasing the fixed amount is in order.

We recommend reviewing an estate plan every three years, or sooner if there has been a major life change as discussed earlier.

One of the most lasting legacies you will leave your loved ones is the contents of your estate plan. With this in mind, it is essential to ensure that the plan that gets carried out matches what your true wishes are. To get outstanding advice and assistance with checking and updating your estate plan, consult Madison estate planning attorney Daniel J. Krause of Krause Law Offices LLC. He can help you decipher if you need an update, and help ensure that your updated documents do what you want. Consult Attorney Daniel J. Krause today.

Contact us through our website to schedule your confidential, no obligation initial consultation.

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