How to Update Your Estate Plan

If your estate plan is three or more years old, or if an heir has died, you need to have it reviewed. Your estate planning attorney should also review the plan when specific events occur in your life. These events include if you got divorced, moved to another state, or you have a new child or grandchild, or there has been a significant change in your assets/liabilities.

If circumstances surrounding your trustees or executors of your estate plan have changed, then also you need to update it. Carefully consider the people appointed in your plan – have they moved away or passed away? Are they still able and willing to perform the jobs you have outlined in your estate plan?

Revising Your Estate Plan After the Death of An Heir

Amending Your Will

If you named the heir in question as one of the beneficiaries in your will, the heir’s family might be eligible to receive their share under California’s anti-lapse law.

However, if the heir in question did not have a family of their own and if there are no blood relatives who are qualified to receive their share under the state’s anti-lapse law, their share will become part of the residuary estate and will be shared among the remaining beneficiaries.

Furthermore, things can get complicated if your will is ambiguously worded or if you failed to name any alternate beneficiaries in your will. With that said, it’s wise to amend your will and specify who gets to inherit the deceased heir’s share.

If you are not sure as to how the amendment might affect other provisions in your will, you can revoke your existing will and create a new one with the help of a seasoned California estate planning attorney.

Amending Your Trust

If you have allocated a share of the assets in your trust to the deceased heir or if you have allocated a share of the revenue generated from the assets in the trust to the deceased heir, it’s essential to amend the terms of the trust so that the share can be allocated to the heir’s family or distributed among the remaining beneficiaries.

Amending a revocable trust is only a matter of replacing the existing trust document with a new one. You can do it any time you want, for any reason, with the help of an estate planning attorney.

On the other hand, if you have set up an irrevocable trust, you can only amend it under limited circumstances. If all the remaining beneficiaries are in agreement with the amendment you propose, you can get it done without any legal intervention.

However, if one or more of the beneficiaries do not agree with you, you might have to file a petition with the court and convince the court that the proposed amendment does not impair the interests of the aforementioned beneficiaries and is not against the material purpose of the trust.

Revising Your Durable Power of Attorney and Advance Healthcare Directive

If you have named the deceased heir as your agent who is authorized to make financial decisions on your behalf, it’s vital to revise your durable power of attorney or create a new one altogether. Similarly, if you have named the deceased heir as your agent who is authorized to make medical decisions on your behalf, you need to amend it as well.

Divorce is also another instance when you must revise your advance healthcare directive.
When you are married, it makes sense to designate your spouse as your healthcare agent, as you can count on them to respect your wishes and make medical decisions in your best interests. Once you are divorced, you need to find someone else who can do it for you in the event of your incapacitation or death.
Once you choose a person, talk to them and make sure they clearly understand what you want them to do. With your spouse, you do not have to spell out everything, as they can instinctively understand your needs. However, it might not be the case with a third party – even if they happen to be your close friend or relative. So, tell them exactly what they should do and what they should not do in the event of your incapacitation or death.

Factors to Consider When Creating or Updating Your Estate Plan

An estate plan is not just about what will happen after you die. It also covers the situation of who should have the authority to handle your affairs when you are still alive but unable to handle them yourself.

If you are not sure where to begin with estate planning, your first step should be to hire an experienced estate planning lawyer. They will help put your goals and thoughts onto a paper and prepare language that accurately expresses your ideas.

Create the Following Documents

These documents are a good place to start:

• Durable Financial Power of Attorney: This is the document where you name an individual to act on your behalf in matters pertaining to all of your property such as bank accounts, real estate, retirement plans, digital assets, taxes, insurance, and so forth.
• Health Care Power of Attorney: In this document, you will name the individual who will only have the authority when you are unable to make a medical decision for yourself. For example, if you are undergoing surgery or you are in an accident and temporarily unconscious and a question comes up regarding your treatment, this individual will have the authority to make a decision. Note: The “agent” you name cannot override your wishes so long as you can speak for yourself or if you have refused/consented to the treatment in the past.
• Living Will Declaration: If you do not want to give anyone authority to act on your behalf when you are unconscious, this is the document you need. For example, if you are in a coma and you do not want to receive technologically supplied food and water, you should give a copy of this document to your doctors.
• Declaration for Funeral Arrangements: In California, you can assign a representative to handle the disposition of your body after your demise. In this document, you will name that person. You can also list preferences regarding preferences (cremation, burial, entombment, etc.)
• Last Will and Testament: This document will list how your property and assets should be distributed after your demise. You will also need to name an “executioner” to handle the distribution to the beneficiaries you name.

Review Your Beneficiaries

A feature with beneficiaries is that their circumstances can change. If you created your estate plan 10 years ago when you were married to your previous spouse, but they are still a beneficiary on your life insurance policy, your current spouse will get the catastrophic news after you are gone.

You should update the beneficiary designation on all the assets, investments, and accounts where your spouse is named as the beneficiary. These might include:

• Life insurance policies
• Investment accounts
• 401(K) accounts, IRA plans, and other retirement accounts
• Payable-on-death bank accounts
• Certificates of deposits
• Real estate properties and other assets for which you have created a transfer-on-death deed

Also, make sure you have backup beneficiaries in addition to the primary ones in case the latter pass away before you do.

How Often Should You Review and Update Your Estate Plan?

Estate plans should be reviewed at regular intervals to make sure any amendments or adjustments can be made according to a change in your circumstances. You should work with an experienced estate planning attorney while designing the estate plan in the first place.

The general recommendation for revisiting an existing estate plan is every 3 – 5 years. Be prepared to speak with an experienced estate planning attorney after any significant event, such as marriage, or the birth of a child, or a substantial change in your financial position or goals.

A good benchmark for updating an estate plan is every five years. This is if nothing significant or unforeseen has happened, such as a divorce, birth of a child, death of a family member, marriage, change in your assets and balance sheet, or change in jobs. You should sit down with your estate planning attorney and go through all the terms listed in the document.

Work with Seasoned Estate Planning Attorneys to Secure Your Legacy

You have worked hard to create the wealth you have today, regardless of its size. To ensure your legacy has a lasting impact, it is crucial to work with an estate planning attorney that you can trust.

At Garmo & Garmo, we understand that estate planning can seem overwhelming, which is where we come in. We can help you pass your property to your family and/or to charity, both upon death and during your lifetime. We can also analyze and implement asset protection and tax reduction strategies, coordinate life insurance, and help plan for possible disability.

Schedule a free, no-obligation consultation today by calling us at 619-897-2144 or filling out this form.