When you completed your estate plan, there was a huge sigh of relief. It was an offputtingly task, in your mind, because it caused you to think about your demise and what would happen in the event of your death or incapacitation. Nonetheless, this was an essential step to take, as it considered a lot of topics that did not cross your mind. But now that years or even decades have past, you begin to think about how relevant and effective your estate plan will be if something were to suddenly happen. It may be time to update your estate plan.
While there are many important working parts of an estate plan, it is important to note your beneficiary designations on a routine basis. Far too often, individuals will leave a prior spouse or a deceased relative as a named beneficiary for a retirement account or life insurance policy. Failing to update these could lead to unintended designations at the time of your death.
Major life events should trigger a re-evaluation of an estate plan. This includes marriage, divorce, births, deaths and other major life events. One of the worst-case scenarios you could find yourself in is failing to update an estate plan following a divorce. This results in a former spouse remaining the beneficiary on your accounts and the named recipient in your will.
It’s important to note that whatever your beneficiary statement says will trump an estate plan. That means that even if you update your will, if you fail to update your beneficiary designation, your beneficiary statement will be used to distribute your assets even if your will contradicts it. This alone signifies how important it is to update everything in an estate plan, as it could result in a costly error that could be difficult to repair following your death.
Although creating an estate plan is an important step to complete, it is important to note that it is a constant work in progress. This means that when life changes occur, it might be time to revisit your plan. While it may seem like a daunting task, but it could mean the difference between your wishes being met and the wrong beneficiary receiving you assets. Thus, it is important to routinely check and update your estate plan, getting assistance with the process when needed.