Estate Planning: Five Reasons to Update Your Plan

The absence of an estate plan is, in fact, an estate plan.

Although that sentence may seem contradictory on the surface, the simple truth is that your lack of planning now could require your family to do the following:

• Go through probate, or a complex legal process to settle your estate
• Rely solely upon lawyers and the court(s) to decide who will inherit your assets
• Give a larger chunk of your assets than may be necessary to tax collectors
• Make difficult medical and/or financial decisions following your incapacity without any insights into what you’d want to have done

This default path could be frustrating, costly and can even result in hard feelings among the people whom you love most in the world. Plus, even if the estate is modest, it can be time consuming to settle a departed loved one’s finances.

Yet by working in advance with a team of professionals, you can capture your thoughts, goals and intentions in a thoughtful estate plan that can:

• Mitigate the need for costly, time-consuming legal processing
• Clarify who will be responsible for settling your estate (and how)
• Manage, reduce or mitigate estate taxes
• Shift part of your income tax burden to beneficiaries in lower tax brackets
• Name your beneficiaries, be they individuals, charities or other entities (e.g., a college, university or a new foundation created in your name)

Of course, once your estate plan is in place, it’s critical that you work with your estate team to keep all relevant documents and information updated and aligned with your goals and objectives.

When (and why) you should update an estate plan

Estate planners generally recommend reviewing your plan every three to five years, so it should be easy to place a note on your calendar at an appropriate interval to schedule an appointment with your trustee and/or attorney.

Still, those recommended revision timelines can vary in the wake of significant life changes. That’s why RBFCU Trust Services encourages all clients to schedule an appointment whenever a major life event occurs. Broadly speaking, these events include anything that:

• Impacts your family’s size
• Influences your overall financial worth
• Changes the governmental jurisdiction within which you reside

To help you gauge whether an estate plan review is warranted, below are a few common triggering events.

1. Marriage Status Change

If you are a newlywed, you should update your plan to include your new spouse and help protect your assets and family legacy.

If you have divorced or have remarried, the process can get a little more complicated, especially if you have children from a previous marriage. Keep in mind that marriage alone does not guarantee your new spouse will provide for your children when you’re deceased. Luckily, many estate planning tools (e.g., trusts or wills) are available to help address this issue.

If you are widowed, then it makes sense to consider how assets now fully in your name should be distributed upon your passing. (See also #3, below.)

2. New Family Member

A comprehensive estate plan should account for the birth or adoption of children. After designating a legal guardian, it can be wise to set up a trust to preserve your assets and ensure your children's inheritance is distributed according to your wishes. Similarly, if you aim to provide funds to support grandchildren or other relatives (nephews, nieces and so forth), you may want to adapt your plan to reflect their arrival as well.

3. Assets or Liabilities Change

Assets can come in many different forms: property, money, stocks, etc. Whenever your assets increase or decrease significantly in value or number, you should review your estate plan.

For instance, maybe you've purchased a new home, received a large inheritance from a relative or started a new business. If so, your estate plan should be modified to reflect these changes.

4. Beneficiary Change

Life is full of natural and spontaneous changes that could impact your named beneficiaries. You may wish to update your beneficiary list after having a child, following the passing of a family member, or when you determine that a loved one would require specialized, long-term care after your passing.

Additionally, it's essential to revise all other legal documents to reflect your designation updates, including retirement plans, insurance policies, wills and trusts.

5. Relocation to Another State

Estate planning laws vary by state. While some differences between them may seem trivial, others are often more impactful. For example, the amount of shares a spouse inherits varies between states. Also, some states require heirs to pay an inheritance or estate tax.

Whenever you move to a new state, it’s wise to work with an estate planner and licensed attorney to update your legal devices (e.g., powers of attorney, living trusts, advance medical directives).

Although many circumstances may require estate plan updates — and the change process itself can feel intimidating — there's no reason to feel like you must do it alone.

We’re here to help.

Schedule a no-cost, no-obligation appointment today.

210-637-4117 | trustservices@rbfcu.org | rbfcu.org/trustservices

RBFCU Trust Services is a division of RBFCU Investments Group LLC. RBFCU Investments Group LLC is a wholly-owned subsidiary of RBFCU Services LLC. RBFCU Services LLC is affiliated with Randolph-Brooks Federal Credit Union (RBFCU). Trust services available through Members Trust Company, a federal thrift regulated by the Office of the Comptroller of the Currency.

Trust and Investment products are not federally insured, are not obligations of or guaranteed by the credit union or any affiliated entity and involve investment risks, including the possible loss of principal.

This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant.